Can't insure vacant rental property? Is this right?

Question

I'm still a newb, sigh ... I'm trying to insure a mobile home we're rehabbing and will be ready to rent out in about a month, and my insurance lady is telling me that insurance for it will be $300/ yr for $30K in coverage (their max) which is fine with me, but then she says the insurance co will want to see a copy of the lease. Fine, except we don't have a tenant yet! I ask her, "Are you saying we can't insure the MH while it's vacant?". She answers, "No you can't. I can check on a vacant policy but I am sure it will be pricy."

Does this mean if we have a tenant move out and it takes a month for us to get a new one, we'll have no insurance for that month?? I'm awaiting that answer, but I don't get it. (assuming 1) she's right, and 2) that I'm not misunderstanding) What's the thinking here?

What say you? Tks!

Does this mean if we have a tenant move out and it takes a month for us to get a new one, we'll have no insurance for that month?? I'm awaiting that answer, but I don't get it. (assuming 1) she's right, and 2) that I'm not misunderstanding) What's the thinking here?

What say you? Tks!

Jeremy Tillotson · Answer

@Jeff Grover  Just have to give this company props and say they are awesome on service. I use them often on rehab jobs. http://www.nreinsurance.com/

No affiliation just happy customer and maybe you should contact them.

Adam Johnson · Answer

@Jeff G. What you are experiencing is not uncommon.  We typically buy rehab properties to hold long term.  Many of these are vacant when purchased.  Our agent is "good" to us by taking her time to get out to do her initial pictures and report.  She can get "real busy" and it can take a couple weeks for her to go to the property, where she exclaims "oh, it's vacant?", which makes it on to her report.  About a week later we get a 30-day cancel notice.  While all of this is happening, we are going full speed to rehab. it.  Basically, this gives us 45+ days to get it occupied.  This allows us to set up on a landlord policy right from the start.

This approach doesn't always work.  We have also had properties that are know vacants and we are forced to buy a limited coverage policy at crazy prices.  After the rehab, we generally re-apply for a landlord policy and cancel the first one.

A big part of this being reality is huge losses to the insurance companies where a so-called "investor" buys a property cheap, insures it, and then a short time later has a catastrophic loss and a large payout from the insurance.  The other part is that a vacant house is more prone to vandalism, but the largest part is that a property remaining vacant for more than 30 days is a leading indicator of owner neglect.

Part of doing business.  Fortunately, we have found an outstanding insurance agent that does the best she can to buy us time to do what we do.  In return, she gets a substantial amount of our insurance business.

Joe Villeneuve · Answer

You can still insure it.  Not all agencies will, but you can insure it.  It just costs more.

MONICA WATSON · Answer

@Kyle Davis

I was wondering the same thing. I received a letter of cancellation for Texas Fair stating inspector went by and property was vacant. The lights are on, there are blinds, and yard maintained...so I don't know. my tenant moves in this week so I just have to fax them lease agreement! I bought property in January, cancellation would have been effective end of March,

Jerry W. · Answer

@Jeremy Tillotson  awesome link bud.  I am very happy with my current companies most of the time.  It is embarrassing but I think I have policies with 4 or 5 different agents.  I am going to book mark their website.

David Krulac · Answer

@Kyle Davis

They ask you.

They have people who go by insured properties.

Some insurer will also tell you that certain repairs need to be made even after years of coverage, things like sidewalks, railings and things visible on outside of property.

If they ask, or you sign a false statement, then have a claim, they can disallow your claim.  Think about if you lie, then the property burns to the ground and they disallow any claim because you lied.

Kyle D. · Answer

How does the insurer know when a property is vacant?

David Krulac · Answer

My insurance company will cover 1 year vacancy, like during a rehab and marketing process.  Then we go to a different company with higher premiums, about 2-3X higher.

If there is no company that will insure here they have a state sponsored plan called the FAIR PLAN.  Its costs are exorbitant and they have lots of requirements like house needs to be boarded up to protect it.  Which makes it that much harder to sell!

Dawn Anastasi · Answer

I have been able to get insurance for a property when the vacancy will be < 30 days.  I typically use Foremost/Farmers.  If it will be vacant for longer I have to go with a company that will be more expensive.

Jason Bott · Answer

@Kyle Davis

Each insurance carrier has a % of occupancy that dictates when it will be considered vacant.  I have seen 31% be a common % used, so below 31% it would be considered vacant.  This same company will allow you to add an endorsement to take that # to 11%.

The important thing is to ask each particular company to just be aware of the %.

Can't insure vacant rental property? Is this right?

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