Why is Insurance for Vacant Properties More Expensive?

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Insurance for vacant properties or those actively held for sale is always more expensive than coverage for occupied properties.  The reason behind this is simple; the insurance industry operates by statistics and actuarial data and vacant properties represent a significantly higher risk in terms of losses by fire, vandalism, water damage, and theft.

Since vacant properties are not visited or occupied on a daily basis, the companies providing coverage offset their increased risk with a higher premium and reduced coverages.  For example, most policies for vacant homes do not include coverage for water damage or vandalism and malicious mischief and most company’s simply refuse to issue new policies on vacant property in the first place.  We can easily insure vacant properties and, if desired, include vandalism coverage with policy terms of 3, 6, or 12 months.

In addition, vacant property is normally insured by ‘surplus lines‘ insurance carriers that have the willingness and ability to develop and issue this type of coverage.  These insurance companies are regulated differently than your normal ‘home and auto’ insurers and they are required to charge sales tax in addition to any policy and/or inspection fees that they may charge.

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