We've shared a bit recently on what vacant structure coverage is and who needs it. That amounts to a whole hill of beans unless you can actual obtain it when you need it for your rental property. The savvy property investor is wise to take into account a few things insurance carriers want to know on the way to providing coverage.
Let's break the vacant structure insurance carrier's interest down into a couple of categories, namely, site and structure. Let's talk about the land the property sits on first.
An insurance carrier will want a lay of the land, no pun intended, when weighing potential risk to your vacant structure. They'll want to know the acreage of where the property sits and what's on it. Is there a lake, pond, creek or other body of water near? Is there a body of water on the premises, e.g., swimming pool or hot tub? Water amounts to risk and increased risk adds up to potential claims.
Knowing where the structure sits can also help an insurance carrier recognize other potential threats to the property. Does the home sit in the middle of a forest where lighting storms are prominent? Is the pond near the home a snake breeding ground? Do wild boars run rampant across the property from time to time? Are there hazardous materials stored near enough to the land that if an explosion happened, your property would suffer significant damage?
Carriers are also looking for positive situations that make your property more insurable. Is there a fire-station nearby? Are you within the city limits? Sometimes these small details can add up to some savings on premium.
You'll want to make sure you disclose to the insurance carrier the information they request about your site. They usually have access to experts and technology on their side to make sure they know as much about your land site as possible. Any variance in your account of the land could lead to no coverage.
Carriers will also want to know the finer details of the vacant structure you're looking to insure. They'll want to know when the structure was built, any loss history, and how secure the structure is since it doesn't have an occupant.
An older home is a home with more possible defects. As in the case of traditional home insurance, carriers know electrical, air conditioning, roof , and plumbing usually show signs of age at some point.
Has the property had a history of claims, e.g., has the roof served as a hail-catcher or seen been the brunt of windstorms several times over the last 10 years? If real estate is about location, location, location, insurance is about condition, condition, condition when underwriting a policy.
With today's technology, it's possible to have eyes on the sky (or at least in the structure) even when your property is left unattended. This can help your cause along with taking preventative measures to make sure adequate locks and security system are in place.
Site and structure aren't the only things a carrier will examine when deliberating your policy, but they are the main things. Be prepared to let carriers know about your land and structure you seek to protect while vacant. Take steps to mediate potential risk where possible, e.g., removing debris, brush, installing security system.
We have more to say about this topic at Insurance For Texans, so feel free to drop in via text, phone, email, or a good old-fashioned office visit. As an independent insurance broker, we'll help you locate the best insurance option while you work hard to fill that vacancy.
Ron Wadley is an owner and General Solver of Problems for Insurance For Texans. Ron is a resident of North-East Tarrant County in the Dallas-Ft Worth area. He loves riding his many bikes and watching his Baylor Bears play football and basketball. Send him your insurance questions at ron@insurancefortexans.com.