Believe it or not, there are likely more than 500 vacant buildings in NYC. The reasons vary and despite the current housing crunch, it doesn’t look like the number of vacant properties is likely to drastically shrink in the upcoming months and years. If you happen to own a vacant property, you should have NYC vacant property insurance.
But what exactly qualifies a property as vacant in NYC?
For the sake of insurance, the rules from one carrier to the next vary greatly. Some consider a property vacant after only 30 days of being unoccupied. Most allow up to 60 days before requiring a special type of insurance for vacant property.
Vacant can be used to describe an absence of furniture and supplies sufficient to support a living being (bed, cooking utensils, furniture for sitting, etc.) or an absence of people.
This is why it’s always best to discuss the condition and status of all owned property with a knowledgeable insurance broker, so you can make sure you’re complying with state and federal law and are fully protected.
Risks of Vacant Properties
The risks of vacant properties are similar to those of occupied properties except they’re a bit higher simply because no one is there to daily monitor the home. While there are actions you can take to lessen these risks, the following are more likely to happen with vacant properties.
- Liability Risks: Because you’re not there to tend to problems and maintain the home, the chances of someone getting hurt on your property are greater.
- Vandalism and Theft: Without someone on the grounds to deter break-ins and nuisances like graffiti and broken windows, vacant NYC properties are more prone to vandalism and theft. (remember the developer in Queens having to payout $6.7 million for taking down 5Pointz graffiti?)
- Water Damage: Leaking pipes, leaking roofs, broken windows that allow rain to come in, and other damage can lead to extensive and expensive damage. This is more likely without someone around to notice the issue sooner than later.
NYC vacant property insurance may seem like a luxury, but in some instances, it’s required. Browse through the following scenarios and see if it’s time to give your insurance broker a call about your vacant property.
Vacant Home as An Owner
Do you own a home you don’t live in? Maybe you bought a new house and have been unable to sell your previous. Maybe you recently inherited a house or own two homes and evenly split time between them throughout the year. No matter the reason, making sure your home is insured when it’s vacant takes a little extra work but is a necessary step. Here’s what you need to know.
- Vacant home insurance can cost 50 to 60 percent more than traditional home coverage. Keep this price in mind if you’re considering purchasing a second home.
- If you did reside in your now-vacant home, don’t assume your homeowners policy will carry through. In most cases, coverage ceases after a house has been unoccupied for 30-60 days, depending on the policy.
- Don’t assume you can get away with leaving your homeowner’s policy as is. Should you make a claim, your insurance company will conduct research to see if your home was unoccupied by checking utility bills and interviewing neighbors.
- Always discuss vacant home insurance before moving out of your home or taking on ownership of a new home, whether through a purchase or inheritance. This will prevent lapses in coverage.
- You may qualify for discounts if you are working with a gardener, caretaker, or homeowners association. Go over all possibilities with your insurance broker to see if the added costs of maintenance are worth the savings you could receive.
Vacant Home Being Remodeled
If your home is going under an extensive remodel and is unable to be lived in for several months, you’ll need not just vacant home insurance but a customized policy that will take the special hazards of construction sites into consideration.
- In a construction zone, there is a higher risk for injury. Even though workers should be covered under their employer’s insurance, there are other situations to consider. If you stop by the home with a friend to show them the progress and they trip on the unfinished stairs, you’ll want to make sure your coverage will prevent outrageous medical bills from piling up.
- Construction zones attract thieves as equipment is often left unattended overnight. There’s also light fixtures, appliances, pipes, and other materials that could go missing. This increases your liability risk and could increase your premiums.
Vacant Home as A Landlord
The insurance you carry as a landlord on a property will change depending on if it’s occupied or not. If a home is unoccupied while you clean from previous tenants, complete repairs, or advertise and screen for your next tenants, take the following to heart.
- While premiums for vacancy insurance for rented homes will vary, you can get a good idea of what yours will be by subtracting 20% from your current landlord policy. This means vacancy insurance is a little cheaper than landlord policies, but this isn’t always the case and depends on the specific market your property is in. An ideal policy will allow you to transition between your landlord policy and vacancy insurance as your unique situation changes.
- There are a couple features you should discuss with your broker when it comes to vacancy insurance for landlords. First, look for mischief coverage, which will protect you from damages done to your home because of the actions of others. If some teenagers break in and spray paint the walls, the issue will be fixed by paying your deductible. Also, ask about liability coverage. It surprises some landlords to learn that an intruder who is injured on something within the home in need of repair on their property can sue for medical costs and other incurred costs. This will provide additional peace of mind when a rental property is left vulnerable and vacant.
Vacant Office Building/Storefront
In most situations, an office building, strip mall, or shopping center is considered vacant if less than 30% of the structure is unoccupied. Your insurance company will need to tell you their specific requirements when determining whether commercial space is vacant. Because your coverage can significantly change if a building suddenly qualifies as vacant, it’s ideal to know about the following.
- Routinely communicate with your insurance broker about the state of your building. Keeping them aware of potential vacancy statuses can ensure you’re always protected.
- A vacancy permit is an available endorsement that reinstates coverage for vandalism, sprinkler leakage, building glass breakage, water damage, theft, or attempted theft. A premium is charged for this endorsement and may not always be approved.
- Do what your budget will allow to protect your building. Keep parking areas in good condition, routinely stop by the property, and utilize monitoring services, whether virtual or the presence of security guards, to keep the property safe.
A vacant lot in NYC isn’t as rare as you might think. There are well over a thousand throughout the city. Having vacant land insurance is a wise investment, though not legally required. Should someone decide to walk across your lot and be injured, having coverage could save you thousands of dollars.
- Sometimes, your homeowners insurance policy includes vacant land coverage in the liability provisions. Always confirm this with your broker.
- Adding an umbrella policy is an affordable way to gain vacant land coverage and additional protection for other policies you already own.
Types of NYC Vacant Property Insurance Coverage
The available coverages for vacant property insurance will vary from one provider to the next, but these are some of the coverages that are available for vacant properties. There are three general types of coverage available.
Named Peril Coverage
The specific named peril coverage for a vacant property is different from most home insurance policies in that it specifically excludes vandalism and malicious mischief. Though it still covers things like fire, lightning, hail, wind damage, and explosions, only those perils specifically named in the policy will be covered.
If someone is injured or damaged (or has property damaged) by or on your property liability coverage helps cover costs related to the injuries or repairs that are required.
Agreed Loss Settlement
In the event of a total loss from one of the perils named in your policy, you will receive the full, agreed loss, amount minus appropriate deductibles.
While named peril coverage specifically excludes damage from vandalism and malicious mischief, some insurance companies offer this type of coverage as a separate policy. It will cost more because the risks are greater, but if you work with a company that offers this coverage it is well worth the additional investment for NYC vacant property owners.
The key is to understand that there are different needs for vacant properties than for occupied properties. Keep this in mind if you need to vacate your property, temporarily or long-term, and purchase insurance accordingly.
When it comes to finding the ideal amount to insure your vacant home, office building, or lot for, you’ll need to advice of an experienced insurance broker. We can help with your NYC vacant property insurance needs.