Did you know that your rental classifications play a significant role in your insurance coverage? After all, insurers treat the words “unoccupied” and “vacant” differently both in your policy and when you file a claim. Why? If your properties sit vacant or are designed for frequent turnover, like an Airbnb, you run a higher risk of having a flood that goes unnoticed, increasing bad water damage, and even theft and vandalism.
Since short-term rentals require a different type of insurance policy than standard rentals, you need to make sure that your insurance company is fully aware of your property’s status. Wondering what else you need to know about insuring vacant units and short-term rentals? Here’s a few important tips to consider.
Why Occupancy Matters to Insurers
How important is the occupancy status of your rental properties? Your insurance company needs to know your occupancy status because of the issues that come with either short-term rentals or vacant units. For example, empty units have a higher frequency of water damage claims, since no one is there to catch any leaks before they become large problems. In addition, there’s a greater risk of vandalism, undetected damage, and theft, all of which are frowned upon by insurance companies. Add in some slower incident reporting because you didn’t know about the damage at first, and there’s a reason why insurance premiums are higher for empty units.
Vacancy vs Unoccupied
Also, you need to keep in mind the difference between “vacant” and “unoccupied” in the insurance world. Policies are very explicit about what they consider one or the other, as well as what they cover should something happen in one of these units. Whether there are no people residing in the unit, versus no people and no furniture, is how insurers determine whether the unit is vacant or unoccupied, determining which parts of your claim they’ll cover. The number of days that the unit is empty matters as well.
Vacant Units: What You Need to Know About Coverage
Vacant units, both in the eyes of insurance companies and landlords, are those that don’t have any furniture or tenants. These buildings are truly empty, and thus run the risk of having hidden leaks and damage (due to freezing weather, etc.) go unnoticed until it’s too late. Lapses in maintenance, break-ins, vandalism, and other damages lead to multiple problems that result in insurance claims.
Of course, if your rental unit is empty due to renovations, your insurance policy needs to reflect that fact.
Short-term Rentals: Insurance Changes
Short-term rentals are a different thing entirely, as they have the risk of different types of claims, like liability issues relating to the use of a pool, wild parties, and injuries to guests. These rentals often lead to frequent claims for nuisance complaints, property damage, and more. As such, they need an entirely different insurance policy.
Have Questions? Contact Charlotte Insurance
Want to learn more about insurance coverage for your rental properties, even the ones that are currently vacant? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan you need.