BY LAURA MAZZUCA TOOPS, PROPERTYCASUALTY360.COM
December 12, 2013
1. What types of risks are most common with vacant properties?
The most common risks with vacant properties are vandalism, theft and water damage. Top vandalism losses include: stolen air conditioner units, stolen cooper pipes and stolen wiring. Vandals and squatters can also break into vacant properties and cause several types of damage, such as water damage if the water has not been shut off or they may start a fire trying to keep warm in the winter.
2. How has coverage and pricing been for vacant property over the last few years?
Pricing for vacant homes has been relatively flat over the last few years, with some areas of the country experiencing slight increases and others seeing slight decreases depending on the state, location and carrier experience in the state. Because more homes are becoming vacant in suburban areas all over the country, several surplus carriers entered the market with increased coverage options at very competitive prices. To meet these changes in the market, American Modern introduced a vacancy permission option to use with the dwelling fire programs which avoids cancel/rewrites when the home is occupied.
3. What should agents keep in mind when applying for vacant property coverage for their clients?
Historically, standard insurance companies shy away from vacant homes, so agents should first find a specialty insurance company that specializes in providing coverage for vacant homes and make sure they have a high rating. Then, the agent will need to make sure they understand the coverages and exclusions of that particular policy. Agents should be sure they know what type of claims will be covered, particularly with losses relating to stolen copper wiring or air conditioning units.
Another aspect to consider is whether their client is planning renovations to a vacant property. Agents should ask the policyholder if they are planning to do any renovations and if so, make sure they understand the extent of the renovations. From that information, agents can evaluate the client’s need for builder’s risk coverage for extensive renovations.
4. What recommendations would you make to agents to help prevent losses in vacant properties?
If the owner is not able to check the home weekly, agents should suggest that they hire a property manager to maintain the property. To prevent losses, agents should be sure that the windows are boarded up and that the dwelling is secured to prevent vandalism and squatters. To prevent frozen pipes and water damage, agents can either ensure the water is shut off and drained from the pipes or, alternatively, they can confirm that the heat is maintained in the building. Ultimately, agents should continue to maintain the property to let intruders know that someone is checking the property regularly and that the building has not been abandoned.