Selling your home/living elsewhere- insurance alert!

[dclfun]

I felt I had to share this as I couldn't believe what happened to a friend of mine. She had purchased a home in another state for cash. It was a custom home built to spec and was to be where she planned to retire. Meanwhile she accepted a job in Florida and decided to sell this home within a few years of purchase. With real estate being what it is, she wasn't too worried about selling it quickly since she had no mortgage but listed it with Coldwell Banker. She has lived in Florida for over 18 months, sending her premiums to her insurance company with them knowing she lived in Florida. She recently found out her home was vandalized- totally stripped from granite countertops, to copper, to cabinets, to appliances. She went to make a claim for the loss and found out that she has NOT and has NEVER been covered as she is not occupying the home. She was never told this information by her insurance company when she told them she was moving or by Coldwell Banker when they took her listing. So now, she's out the money which was essentially most of her retirement income in that equity and is wondering why she paid for this policy that was essentially offering her no coverage since she's not the occupant. Has anyone else ever heard of this? I know.....read the policy, but this information was buried in small print of course. Anyone else who might be in this situation- beware!---Kathy

 

[chattyann]

I had some friends that this happened to. They bought a new house and were trying to sell their other home that was empty. Their place was vandalized then set on fire. The insurance company told them the same thing even though they had paid the premiums all along. After my grandmother passed, we put her home up for sale and knowing what happened to my friends we talked to the insurance agent and he said as long as a family member was staying part time it would be covered. So we took turns every week someone would stay there one night until it was sold.

 

[jedijill]

I have a home back in KC. I had heard of this and specifically called the insurance company to make them aware. My homeowner's insurance doubled for a "fire policy." I thought it would go back down after I got renters in it but the amount stayed the same. I'd rather pay more than go through what the OP's friend went through.

Excellent warning as more and more people end up with unoccupied homes in other locations.

Jill in CO

 

[mhsjax]

I felt I had to share this as I couldn't believe what happened to a friend of mine. She had purchased a home in another state for cash. It was a custom home built to spec and was to be where she planned to retire. Meanwhile she accepted a job in Florida and decided to sell this home within a few years of purchase. With real estate being what it is, she wasn't too worried about selling it quickly since she had no mortgage but listed it with Coldwell Banker. She has lived in Florida for over 18 months, sending her premiums to her insurance company with them knowing she lived in Florida. She recently found out her home was vandalized- totally stripped from granite countertops, to copper, to cabinets, to appliances. She went to make a claim for the loss and found out that she has NOT and has NEVER been covered as she is not occupying the home. She was never told this information by her insurance company when she told them she was moving or by Coldwell Banker when they took her listing. So now, she's out the money which was essentially most of her retirement income in that equity and is wondering why she paid for this policy that was essentially offering her no coverage since she's not the occupant. Has anyone else ever heard of this? I know.....read the policy, but this information was buried in small print of course. Anyone else who might be in this situation- beware!---Kathy

I know this to be true, but only beaus my mm and dad passed away and the insurance company said that the home needed to be occupied to be insured.

 

[vicki_c]

I have also heard this as it pertains to vacation/2nd homes. It has to be occupied or you pay a much higher premium to keep it insured.

 

[allison443]

We had a similar situation in our family, an elderly relative moved in with family members and her house was going to be vacant while it was for sale. There would have been a change in the insurance (however, another relative ended up staying there till it sold)

OP did your friend ever change her mailing address with the insurance company? Or was her mail still going to the empty house address, so they thought she still lived there?

 

[veraletta]

Yes I have heard of this from my own insurance Company, essentially you have to live in your house, or no coverage., also higher premium if you rent out your home too.
I was told because if the person got hurt even tho they are renting the insurance company is taking a risk.
Their are risk in even owning a dog, all this adds up to insurance company asking you for more money for your premium.

 

[kellydizfan]

Yes this will happen if you are not using the house as the policy was written -usually no coverage after 60 days of being unoccupied or vacant if written as a homeowners policy and it sounds like this was the case from the start unless it was written as a seasonal home or 2nd home but then there are stipulations made by the company prior to coverage being written - each company is different. It needed to be rewritten as a vacant home - basic fire insurance with EC and vandalism and malicious mischief (sp?) then there may have been coverage if the proper safeguards taken that the insurance company required. She should have contacted her insurance agent when she knew she wasn't using the house as intended. It is not up to her real estate agent to tell her - that person is not an insurance agent - doesn't have a license to recommend coverages, etc. You won't believe this but it happens quite often, especially in todays market where houses are left vacant while the owners go thru different problems. Yes even as a rental the insurance is expensive as you have a tenant in there with no control over what the tenant will do while occupying your home. That is why the insurance is so much higher than what a regular home policy costs. It is an expensive lesson learned as there are many out there that have learned this lesson over the years.

 

[Kay1]

I have never heard of this and I'm stunned. Thanks for the warning, Kathy.

 

[PinkRhombus]

Me neither! Wow.

 

[DVCBELLE]

I would think if the insurance company knew where she lived and she can prove that - with any correspondance - she would probably have a case to get her premuiums back. It wouldn't be much but certainly something.

 

[Halloweenqueen]

We have a lake condo we have been trying to sell for two years now. The monthly expenses continue to rise...the insurance is probably double from a normal residency type insurance, the monthly HOA has doubled this year, plus they have had three assessments for repair/remodels.

Talk about kicking someone when they are down. We own it cash and have reduced it by $100,000 in just this year alone.

Now potential buyers are asking us why it's so low. lol You just can't win.

OP sends out a very important warning. Many times we have received offers from other insurance companies offering lower rates. Everytime we find that they are for regular, not vacation home insurance. It's scary to think how many people are buying monthly on worthless insurance.

 

[holycow]

This is so sad! I didn't know this.

 

[allison443]

I would think if the insurance company knew where she lived and she can prove that - with any correspondance - she would probably have a case to get her premuiums back. It wouldn't be much but certainly something.

I was wondering that too...if she changed her address with the insurance company.

 

[princessmom29]

I was wondering that too...if she changed her address with the insurance company.

If it is written into her policy then the insurance company is covered. They will say that had she read the policy she should have know she needed to cover it. It is the responsibility of the property owner to sucre proper insurance. There was no mortgage company here to insist the coverage be changed, as is usually the case.

 

[bettymae1121]

I had never heard of this, though it make sense now that I think about it. It may have been in the fine print but I think it should have been clear to the insurance agent that she wasn't aware of it (who would pay for worthless insurance?). The insurance company may be covered legally, but I think it speaks very ill of them that they didn't make sure she understood the situation. I would hope they they offer some sort of goodwill gesture, like refunding the premiums.

 

[poohfriend]

I'm thankful both my insurance company and realtor informed us of issues when we moved into a new home without selling the first.

 

[DISdreamin']

Just out of curiousity, did the person in question have BOTH policies (for the FL location and the other) with the same insurance company and agency? If she did, I would think there would be a VERY good case for questioning how this could occur. If the policies were with two different companies, that is another matter entirely...

Additionally, when she applied for the policy, didn't the agent or company ask whether she would be occupying the home before writing a policy? It really sounds like something got overlooked if she NEVER lived in that house.

 

[LeslieG]

I'm wondering about rental homes. If you have a rental property, what if it sits vacant with no tenants?

 

[jedijill]

I'm wondering about rental homes. If you have a rental property, what if it sits vacant with no tenants?

You have to specifically tell your insurance company to they can write a policy for that. As I posted above, I have a rental home and I pay about twice as much now as I did when I lived in the home. The cost for the house to stand empty is about the same as with tenents in it. (I have homeowner's through USAA)

Jill in CO