Investor · Indianapolis, IN · Member since 2016 · 221 posts · 134 votes
I bought my first rental property in May in Huntsville, Al, and now the insurance company (State Farm) is threatening to cancel our policy because the property has been vacant for over 30 days. Is that normal? What do other investors do when you have a vacancy period exceeding 30 days? I am freaking out that our asset is uninsured now. I feel like the insurance company blindsided me with this! Any advice and recommendations are appreciated!
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
10y
I write foremost policies for vacant and rehabs. They can go vacant up to 5 years no problem. To do a rehab, you still use the vacant policy but be sure to give the scope of work to your agent. Plan on doing the exterior work 1st as the main concern for Foremost is the shell of the home being secure from the elements and intrusion. As @Lynn McGeein mentioned, you can get vandalism coverage on this policy. You can also get liability and theft which you cant get on builders risk policies. Their minimum earned premium is $250.00 so plan on staying on that policy until that amount is used up. As for them waiving the rest of the unearned premium if you flip the policy over to a landlord policy with them, I'm not sure about that, but I bet they will do that? Its worth asking?
Also remember that they do not have limits on the numbers of properties they will insure for you and they will do properties owned by an entity (LLC / INC) as a personal line policy. There is a whole lot to like as far as investors are concerned.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
10y
It's pretty common. Insurance companies see vacant homes as having a higher risk for damage. If the home is going to be vacant for an extended period of time, you'll need to get a vacant-home policy that will likely have different coverage/premiums. Some companies won't insure them at all, but others will. Though some of the perils (i.e. vandalism, etc) may not be covered.
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
10y
We love USAA, but even they won't insure past 90 days vacant. We've found American Modern and Foremost will issue vacant policies, but American Modern would not cover vandalism and Foremost would, at least in NC, so we went with Foremost for the vacant policy. If you fill it quickly, they won't charge you the expensive minimum charge if you convert it to a landlord policy with them afterwards, and they were as reasonable as USAA in pricing. But USAA has all our others. And they insure up to 10 investment properties now.
As far as homes needing major repairs, many insurance companies won't cover those.
New York City, NY · Member since 2015 · 8 posts · 2 votes
10y
This is pretty normal, but my insurance agent did tell me about it ahead of time. Speak with your broker, they also may able to help you smooth it over.
Good luck.
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
10y
I write foremost policies for vacant and rehabs. They can go vacant up to 5 years no problem. To do a rehab, you still use the vacant policy but be sure to give the scope of work to your agent. Plan on doing the exterior work 1st as the main concern for Foremost is the shell of the home being secure from the elements and intrusion. As @Lynn McGeein mentioned, you can get vandalism coverage on this policy. You can also get liability and theft which you cant get on builders risk policies. Their minimum earned premium is $250.00 so plan on staying on that policy until that amount is used up. As for them waiving the rest of the unearned premium if you flip the policy over to a landlord policy with them, I'm not sure about that, but I bet they will do that? Its worth asking?
Also remember that they do not have limits on the numbers of properties they will insure for you and they will do properties owned by an entity (LLC / INC) as a personal line policy. There is a whole lot to like as far as investors are concerned.
Investor · Indianapolis, IN · Member since 2016 · 221 posts · 134 votes
10y
Thank you all! After discussing options with my State Farm agent we've decided to switch to USAA, which was recommended to us by several people. The rates are higher, but it will hopefully be worth the reduced pain in the butt of State Farm's 30 day policy. The best my SF agent could do was buy me an additional week. They have no vacancy policies and she could no do an endorsement. We already have another property in need of a few repairs before tenants can move in, and I didn't want to deal with this all over again with that property as well.
Learning so much already! It's stressful, but fun too!