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Homeowner's Insurance being cancelled...
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March 13, 2009, in Homeownership

Our home is for sale & we had to relocate out-of-state for employment purposes. Our insurance carrier just notified us that they are cancelling our policy because they assume that our home is vacant, even though we go there every week-end to take care of our home. How will this affect our mortgage? We are going to get another carrier, but I just was curious what happens with the mortgage company.

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Mary Hester    March 25, 2009

In most mortgages the home owner is required to maintain insurance on the property and the lender is to be named as a loss payee on the policy. You should be talking with your insurance agent as soon as possible so that you can arrange for replacement insurance. Many mortgages provide that if the property is no longer insured the entire mortgage balance becomes due and payable. My experience in the Jupiter Florida real estate market has been that insurance companies charge more (it can be a lot more) to insure vacant property. Even though you visit every weekend, an insurance company would probably consider the property vacant - but again talk with your insurance agent. You could rent the property to a tenant so that it is not vacant. However, if the property is on the market for sale it can be more difficult for real estate agents to show the property to perspective buyers when there is a tenant. Of course, the easier a properly priced home is to show, the faster it should sell.

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Joel Nelson    March 29, 2009

Insuring a vacant home isn't easy and it is misunderstood by many people who have moved.
Even if you have a policy in effect, you don't neccasarily have the coverage you are paying for if the house is vacant.
Buried in the fine print of your policy is probably a clause that says if your home is vacant for over 30 days, you will only have coverage on the structure and none of the contents. In addition, many of the riders on your policy may be no longer in place.
Vacant home insurance is a tricky thing and often more expensive.
Check with your insurance agent.


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