Standard residential & commercial policies all have a vacany clause where the carrier limits or excludes coverage altogether. In many cases this clause will kick in after 60 days of unoccupncy/vacany, pending sale, and/or undergoing major renovations. It's important to read the fine print in this clause as they typically exclude all liability coverage and limit/exclude property coverage, this varies by carrier, coverage forms, and property type.
Property Coverage Explained
Actual Cash Value Settlement Option - This is the most common settlement option when it comes to vacant properties and accounts for depreciation of the property wen paying out for a claim.
Builder's Risk – Provides coverage for the value of improvements, alterations, repairs, and building materials while under construction. Once construction has been completed it’s important to endorse the dwelling limit to reflect the additional value and remove the builder’s risk endorsement.
All Perils Form - More commonly referred to as a DP-3 Coverage or All Perils Coverage provides coverage much like a landlord policy and is a named exclusion form instead of a named perils form. This is the most robust coverage form available for vacant properties and includes all the coverage on a Named Perils form and more such as Vandalism/ Malicious Mischief, Water Damage, Replacement Cost Valuation, Residence Burglary, &&Optional Theft Coverage (Central Station Burglar Alarm Required)
Named Perils Form - Also known as a DP-1 Coverage or Basic Coverage form this type of policy provides basic coverage such as fire, hail, lightning, internal explosion, and other named perils outlined within the policy contract. It's also important to point out that this type of policy settles all losses on an Actual Cash Value basis.
Flood – Flood coverage is excluded from nearly all property policies and is required if the property is in a flood zone. Coverage options and price are largely determined by the flood zone determined and if any prior flood losses have occurred.
Full Repair Cost - This is another excellent coverage option if you're looking to keep costs down. Full Repair Cost provides replacement cost coverage on any partial loss however in the event of a total loss the claim would be settled on an Actual Cash Valuation.
Premises Liability - This provides coverage from $100,000 - $1,000,000 depending on the option selected if you're found legally responsible for an accident that causes injury to someone on the scheduled premises or causes property damage.
Replacement Cost Settlement Option - This option is often required by lenders o ensure the full value of the property is covered in the event of a loss. In the event of a total loss the carrier will indemnify the policy holder up to the limit of the property coverage selected
Vandalism/ Malicious Mischief - Adding this type of coverage will protects against losses sustained as a result of an individual or individuals intentionally causing injury or damage to the property.
Wind/Hail – In certain states such as Florida & Texas wind & hail coverage is not automatically included however it can be endorsed back onto the policy or written separately.
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