Real Estate Law
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CALIFORNIA HOMEOWNER's INSURANCE: since Occupied, Unoccupied and Vacant definitions can vary from policy to policy, or are sometimes not defined in policies how can we know what policy we need? In advance of our September renewal date, we received: Farmers "Protector Plus Homeowners Package Policy 4th Edition" is no longer being offered in California. With this renewal we are offering you the"Next Generation Homeowner's Policy 3rd Edition." An agent said that the State of California's new law(s) impacting Homeowner's Insurance about November 2012 was the reason. Our homeowner's policy renewed for over 40 years with no claims ever filed until a recent burglary.
We leave for an extended vacation soon. Our agreement with our tenant on adjacent acreage includes caretaking duties while we are gone: be aware of our house, walk the perimeter including the upper deck, outside doors, keep defensible space/landscaping since we are in a fire hazard area. He replies by email regarding storms/bad weather that could threaten our home.
How can I expect to be covered for fire, theft etc? Are we required to obtain VACANCY insurance? We never thought that our home could be considered vacant by an insurance company while we are on an extended vacation, but I am uncertain now.
In searching for information I have read information on websites which I am uncertain if/how it might apply to our situation: Is lack of a COO (certificate of occupancy) relevant? Our building permits had no expiration dates when issued. The county official stated we just needed to request an inspection for COO after completing a couple of (relatively minor) tasks. Is our home considered "under construction?"
A) http://www.propertyinsurancecoveragelaw.com/tags/vacant-property-coverage/ In California, the "Construction" Exception to the Vacancy Exclusion Applies to Both New Construction and Renovation.Most property policies contain an exclusion that voids coverage if a structure is vacant before the loss, commonly for 30 or 60 days. The thought behind the exclusion is that vacant or unoccupied buildings face an increased risk of vandalism and theft as well as property damage due to neglect or disrepair.1 However, an exception to the vacancy exclusion exists when the building is “under construction.”
B) http://www.propertyinsurancecoveragelaw.com/tags/vacant-property-coverage/ On August 18, 2010, Insurance Commissioner Steve Poizner issued a press release encouraging California homeowners to review their homeowners' policies and to consider their options regarding vacancy protection. Two years later, it is evident that in California, property claims are on the rise and property insurance claim denials based upon vacancy or occupancy are also on the rise. Many policies provide that if a property is vacant or unoccupied, then a loss may be excluded.Deciding whether a property is unoccupied may be easier than figuring out if the property is vacant. However, the interpretation of the words vacant and unoccupied in an insurance policy is a question of law. Whether the property was vacant or unoccupied at the time of a loss is a question of fact. In the event of a contested denial on vacancy or occupancy grounds, it is often up to a court to interpret the insurance policy. Normally, a court would look to the policy to see if it defines occupancy or vacancy. If a homeowner knows that a property will remain vacant of unoccupied for an extended period of time, there may be coverage available by endorsement. Such endorsements come at an additional cost.
If a building permit is left open, it would not be considered constantly "under construction" for any purposes, including insurance, long after the work has been completed. Closing out the building permit must be done at some point but really does not affect anything unless you try to sell the house in which case the lender and new owner will expect that the building permits will be closed out by final inspection. I honestly do not think that you would be able to use this to state that the house is under construction in order to get around a "no coverage if the property is vacant" clause. Regarding whether or not to purchase vacancy insurance -- if insurers in your area are excluding for that then my suggestion is to contact your agent and insurance company and go over with them about the time you will be on an extended vacation to determine the coverage that you need. AS you can see through your research, the courts base coverage denials/grants on what the language in the policy is -- so if your extended vacation turns out to be not covered because the insurer will consider the property vacant, you may end up in court regarding the matter actually splitting hairs with the insurer over how long a vacation can be before the house is considered vacant (I did not find any case law interpreting that point in CA as I reviewed your questions).
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Are you licensed in California? We never initiate court actions. There is no mortgage on our home but if someone was injured on our property I need liability coverage. Our extended vacations range between six to nine months. Are vacancy policies for homeowners who take extended vacations? Or am I supposed to be looking for an company that sells a different type of policy.
I am uncertain if changing insurance carriers will require an agent to inspect our home. We won't be home anytime soon, so our tenant would have to handle that.
Many custom built homes in our area are not finaled.
Our homeowner's policy was transferred to a different agent after the previous agent was no longer licensed to sell insurance. The agent made an extremely unfavorable first impression when we met him. However, someone suggested it was best to stay with the same insurance carrier in case we had claims in the future because the claims department for the carrier might treat us better if we ever had a claim.
Hello again -
I am not licensed in CA but I do have extensive experience with homeowners policies and local certificates of occupancy. I will opt out and let someone else assist.
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