Keeping Up-to-Date Policies on Vacant Homes

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The Vacant Home Trap: A Hidden Risk in Estate Administration

When a person passes away or moves into a long-term care facility, the family is focused on managing the immediate emotional and logistical challenges. One of the most overlooked but financially dangerous risks during this time involves the home they leave behind: the standard homeowner’s insurance policy may no longer be valid.

Why Standard Homeowner’s Insurance Fails

Most homeowner’s insurance policies contain a “vacancy clause.” This clause typically voids or severely limits coverage if a home is left unoccupied for a specific period, often as little as 30 to 60 days. From the insurer’s perspective, a vacant home is a much higher risk for issues like undetected water leaks, vandalism, or fire.

This creates a perilous situation. Families often continue paying the insurance premiums, believing the home is protected, only to discover after a catastrophe that their policy lapsed and they have no coverage.

Do Not Rely on Verbal Assurances

A common mistake is to rely on a verbal promise from an insurance agent. While an agent may claim you are covered, they cannot override the explicit written terms of the insurance contract. If the policy’s vacancy clause is triggered, the company can deny the claim, regardless of what the agent said. This can lead to costly litigation where the family is left to cover the entire loss.

The Proactive Solution: Securing the Right Coverage

As soon as a home becomes vacant, the person responsible for the estate must be proactive. The proper steps include:

  • Immediately Notify the Insurance Carrier: Inform the insurance company in writing that the home is unoccupied.
  • Request a “Vacancy Permit”: Some insurers offer an endorsement or “permit” that extends coverage on the existing policy for a vacant property, though often with some limitations.
  • Secure Vacant Home Insurance: If the current insurer will not cover the vacant property, you must obtain a specialized vacant home policy. This type of insurance, sometimes referred to as fire insurance, is designed for the unique risks of an unoccupied house. While it may be more expensive and offer less comprehensive coverage than a standard policy, it is essential for protecting the asset.

A Critical Step in Estate & Trust Administration

Protecting the deceased’s property is a primary legal duty of an executor or trustee. The home is often the most valuable asset in an estate, and failing to secure the proper insurance is a serious breach of that duty. This critical task is a key part of the complex process of estate and trust administration and underscores the importance of having a comprehensive plan for your estate.

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