Every time I look at listings on the MLS (I always like to keep up on new listings) I see pictures of houses that are clearly vacant. I can't help but wonder if the seller has notified their insurance agent or not. On the flip side about once a month lately we get a forwarding notice for someones home insurance who has not notified us they moved out.
As a Realtor you would be doing your clients a favor to remind them to notify their insurance agent they are no longer living in the home. Why? Because the standard home insurance policy used by many insurance companies is not designed for vacant homes and it has exclusions that could create huge gaps in coverage for vacant properties.
Lets say a seller buys a new house and can't sell theirs. They move to the new property and their other house sits empty for a few months. When the Realtor goes to check on the house before a showing he or she notices a broken window. Inside the house, what drywall isn't spray painted is broken and there is water running throughout the house. While it's a huge mess, it's no problem because the seller has insurance. Right? Probably not. Typically vandalism and malicious mischief is excluded if the house is vacant. Also excluded is any ensuing loss caused by the vandalism. It could cost the client tens of thousands of dollars to repair, not to mention the amount of money lost in carrying costs while the home is repaired. If the water has been running for a long period of time there could be even bigger issues with mold and the like.
So what happens if the client does notify their agent they've moved out? Well, to be honest, it's likely their home insurance policy will be canceled in 30 days. They will have to get a special vacant dwelling policy which should be available from any independent insurance agent (or at www.brouwersagency.com). Yes, it does cost more than a standard home policy, but what's the point of paying for the standard policy if you have no coverage anyway?
It's unlikely that vandalism is the only vacancy exclusion in the policy, so your clients should always contact their agent to make sure they're properly covered.
You've got car insurance, right? Of course you do, everyone does. But are you sure you're going to be covered if you get in an accident? As a real estate professional you may have unknown gaps that could lead to financial ruin.
The personal auto policy is designed to cover a car during it's daily travel to and from work and around town during your free time. Any time you use your car for business purposes you are creating potential for disaster. That is, unless you have endorsed your policy to cover your vehicle for business use. So how does that affect you as a real estate professional? Any time you're out showing your clients properties it is considered business use. If you were in an accident and the insurance company discovered you were operating the vehicle during the course of business they have the right to deny the claim. This may not seem like a huge issue in a fender bender, but what if you were t-boned at 40mph? Or what if you caused serious personal injury to another driver?
Another situation to consider is perhaps you did endorse your policy to cover your business use, but for some reason you have switched vehicles with a spouse or child. The business use classification is a auto-level endorsement which means it applies to specific vehicles, not the policy as a whole.
The moral? Before you take your next client out to see their next dream home make sure talk to your insurance agent. As with everything in life it costs a little bit more to be properly covered (emphasis on little), but in the case of a loss it can save you thousands if not hundreds of thousands in the case of a personal injury accident.
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I specialize in personal lines insurance for The Brouwers Agency in Middleville, MI. Our client base extends from Holland to Flint, from Benton Harbor to Harbor Springs.
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