Changes in home ownership and occupancy can affect insurance coverage. You must find the right policy for the property and its use— in effect, the round peg for the round hole.
Here are the basic property insurance policies and what they cover, along with some changing circumstances we often discover that no longer work for these policies.
A homeowner’s policy will cover 1-4 family units and/or contents owned by an individual or a trust, and occupied by the owner, trustees or beneficiaries. It will cover both the property and the liability for stated perils. The home must be occupied and furnished within 60 days of the effective date— sometimes 30 days, if the insurance company’s guidelines require.
A business owner’s policy will cover property units owned by an individual, partnership, corporation or any combination of those. It will cover both the property and the liability for stated perils. The property must be occupied and furnished within 30 days of the effective date.
A dwelling fire policy is designed to cover the structure of a building owned by an individual or a trust which is occupied, but not by the owner. It will cover liability for the premises only. The home must be occupied and furnished within 60 days of the effective date— sometimes 30 days if company’s guidelines require.
Obviously, the family with a primary home or a rental property occupied by a year-round tenant are the round pegs. But what happens when there are different circumstances than those mentioned above— in essence square pegs? Unusual circumstances seem to be growing more rapidly than the insurance industry can accommodate. Here are some common ones that I am seeing:
For health reasons, a person has to permanently move to a care-giving facility—leaving their home unoccupied.
The home is being foreclosed-on, and the owners have left the home.
For legal or tax purposes, the home ownership shifts to an LLC, LLP or corporation.
You purchase a new home, but want to do work on it before moving in, and it will take longer than 30 days.
You purchase a home with the intention to renovate and resell.
If you do not communicate these changes or intentions to your local insurance agent, Jason Shroot, it can jeopardizes your coverage for claims even though you continue to pay premiums. In some circumstances, homes will be covered until the existing policy period ends, as in the case of a deceased homeowner. In other cases, coverage may extend to your changing circumstances for 30 or 60 days before the insurance contract or specific coverage voids, as in the case of a vacant home. Or at claim time, you could find that you have no coverage since you’re no longer adhering to the insurance contract you signed.
A good example occurs when a primary home becomes a rental home. The remedy is to find a policy that fits the changed circumstances; coverage may be different and more expensive especially in the instance of vacant-home policies. An appropriate policy is a necessity.
These days, Jason Shroot is seeing that the Insurance companies are taking a very hard line with changed circumstances, most likely due to the huge increase in vacancies, foreclosures and arms-length liability transactions— all spurred by these difficult economic times. Insurance Companies have even increased the scope and frequency of inspections to help manage the situation. In essence, insurance companies no longer allow square pegs in round holes.
Please Contact Jason Shroot at 714-988-3325 and let's please review your insurance policy situations.
Please also contact Jason Shroot at www.JasonSellsInsurance.com or jason@diversifiedinsurancequotes.com
