Insuring the Home When it Sits Vacant

For consumers who are having trouble unloading their homes on the present real estate market, one issue is coming more to the forefront.

Reports show that as the number of vacant residences for sale go skyward, so-called “mansion squatting” is also increasing, especially in bigger metro areas like Chicago, Los Angeles and Seattle.

The incidents of such actions are becoming too commonplace in 2010, as a struggling economy leaves more homes on the market for longer periods of time.

In one such incident, a woman was taken into custody in Seattle for reportedly residing in a $3.3 million residence that she did not own. Halfway across the country in Chicago, an individual reportedly relocated his furniture and big screen television into a vacant $700,000 residence while introducing himself to the neighbors as the new owner.

A spokesperson for Showhomes, a nationally franchised network of home stagers, notes that a homeowner who permits a residence to sit empty for some time is “playing with a grenade.”

As he notes, the reason there is the majority of insurers refuse to insure vacant residences, leaving homeowners with limited options for coverage. Damage and vandalism carried out by a squatter is many times not covered by homeowners’ insurance should the residence be vacant.

The spokesperson goes on to note that major carriers terminate policies on vacant residences following one to two months, many times without warning. The end result of such an action is that the home is left uninsured. Some companies underwrite vacant home policies which don’t provide full coverage and cost up to 400 percent higher than a traditional homeowners’ policy.

One possibility to avoid those problems for those selling their homes is using live-in home managers who assist in staging the residence, prepping it for Realtor tours and act as on-site caretakers.

Given the home is occupied, owners then become qualified for sharply reduced insurance rates with much better coverage than vacant residence policies provide. The live-in home managers assist in selling homes faster and for greater prices.

According to the U.S. Census Bureau, vacant residences continue to be an issue with today’s struggling housing market. Numbers show there were 19 million vacant homes in Q1 2010.

If you are trying to unload your home and not presently living in it, be sure to employ all precautions that it does not become a target for squatters.