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My Homeowner’s Policy Covers Fire, Right?

As a personal lines insurance agent for many years, I cannot say I have seen it all. However, I have seen a lot. I think the more important thing is what I have not seen, but very easily could have. I apologize if this seems cryptic, so I’ll explain.

For most homeowners, their initial response is, “Yes, my house is insured if it catches fire!” and usually they would be correct. This is not about the usually. This is about the unusual that I’m beginning to see more and more frequently.

“The House is for Sale! We’re out of here!”

The standard homeowner’s policy language is clear. If you want to be covered YOU as the insured, must OWN, and (here is the big one) OCCUPY the residence. The residence is the one listed on the Declarations Page. If you decide to pack up and move out while the residence is for sale, the clock will start to tick down. 

After 60-days (or less) of unoccupancy you would be hard pressed to have an insurance carrier pay a claim. 60-days is not very long when considering the length of time a transaction can take to complete. If you move out before you accept a contract, you are almost certain to exceed the 60-days. If the house is vandalized, suffers water damage, or has items stolen from it, you will be left paying for them. 

But unoccupied houses are not the only way to lose coverage…

“My Sister’s Family is Moving in!”

A family member or a friend moving in might seem like a sure-fire way to eliminate that whole “occupancy” tripwire. Unfortunately, it is not, and, in my opinion, it is worse. 

Once you as the insured, vacate the residence, the entire insuring agreement of the policy goes right out the broken window. If someone else moves in, even if they do not pay you rent, you are no longer considered the “homeowner” but rather the landlord!

Your sister can purchase a renter’s policy (even if she is not formally paying rent) and have her personal items covered and even some liability protection. You as the owner though, still holding that homeowner’s policy, are out of luck. For you to have any protection, the homeowner’s policy would need to be cancelled and rewritten as a Landlord policy (also known as a Dwelling Fire policy). Of course, that needs to be done before the loss!

“I’m glad I read this!”

Me too! You will now be cooler at parties.

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