Challenges in Insuring Vacant Properties | Insurance business America
Here are the important considerations…
The following article was provided by REInsurePro.
Insuring vacant residential properties presents unique challenges that must be carefully considered. Unoccupied homes have an increased risk of loss, ranging from vandalism and theft to liability issues. Successfully meeting these challenges requires a comprehensive understanding of the associated risks and effective risk mitigation techniques.
Consider the duration of the vacancy, as different coverage may be required for short-term and long-term vacancies. Short-term vacancies, such as those due to renovations, may require a flexible insurance policy that accommodates changes in occupancy. Long-term vacancies, such as properties pending sale or occupancy, are exposed to hazards such as vandalism, theft, water-related damage and liability risks over an extended period of time and require more comprehensive coverage to mitigate potential losses.
The condition and location of the property can play a large role in determining insurance needs. The condition of the property and its surroundings can significantly influence the level of risk involved. For well-maintained properties in areas with low crime rates, standard insurance may be sufficient. However, properties in high-risk areas or those undergoing extensive renovations may require the purchase of special policies with higher premiums.
Conspicuously vacant properties can attract the attention of unwanted intruders such as squatters, vandals, thieves or even neighborhood children. Squatters in particular pose an additional risk as they may engage in activities that increase the likelihood of fires or other property damage. Vandals can cause a range of destruction, from graffiti to more serious acts such as arson. There is also a very high risk of theft in vacant properties. Those hoping to make a quick buck often resort to uninstalled or easily removable and profitable items such as furnaces, air conditioners, furnaces, water heaters, electrical wiring and copper wiring. To mitigate the risks associated with vacant properties, it is critical to prioritize preventative measures as outlined below.
Unauthorized residents not only increase the risk of property damage, but also pose significant liability risks. Imagine a scenario where the aforementioned neighborhood child enters your client’s vacant property to explore and sustains an injury due to a broken floorboard or exposed wiring. This could lead to liability claims against the property owner. It is important to remind policyholders of the importance of purchasing comprehensive liability insurance in addition to their property insurance. Additionally, advising clients on effective risk management strategies, particularly for vacant properties, can help mitigate losses and ensure adequate protection.
The following tips can help property owners deter unwanted visitors and reduce risk while the home is vacant.
Messy/messy yards, overflowing mail, and darkness are all signs that no one is home. Yards should be mowed regularly and trees and shrubs maintained. When mail is delivered, it should be accessed frequently. The house should be well lit, especially the entrance areas. Burglars are less likely to attempt a break-in if they feel like they will be caught in the act. Extra care should be taken during renovations as large dumpsters, construction vehicles, etc. will make it clear that the home is empty.
Drain Pipes/Maintain Heat: The risk of water-related damage, including burst or frozen pipes, could be significantly reduced if the plumbing system is drained and/or heat is maintained.
Locks and door reinforcement: Doors and windows should be closed with sturdy fittings and long screws. For added security, consider reinforcing exterior doors with metal jambs and hinge guards.
Alarm systems: Signs on the front windows or in the yard indicating that an alarm is monitoring the home can be a big deterrent. It’s even better to have a real alarm.
Neighbors: Good relationships with neighbors allow property owners to have “eyes and ears” around the property.
Inspections: Conducting regular inspections to ensure the home is still safe can also help property owners identify any maintenance issues that need to be addressed.
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2024-04-03 15:02:53
www.insurancebusinessmag.com
