When universities closed due to the coronavirus outbreak, tens of thousands of students who had been renting houses or apartments near school suddenly up and went back to their parents’ homes. If the crisis causes those properties to be vacant for more than 30 days, the owners of those properties should contact their insurers to prevent problems if a claim arises.
With the COVID-19 outbreak closing schools all over the country, in some cases indefinitely, students have flocked back home to their parents’ homes to wait out the crisis. That may be in their best interest, but if you own a property that you rent to students, it could leave you exposed if there’s a claim while nobody’s there.
Most property insurance policies contain an exclusion for certain kinds of claims if the property is vacant for more than 30 days at a time. The reason is that claims experience shows that properties are significantly more likely to have break-ins or be vandalized while nobody’s home.
What kind of claims are excluded?
Not surprisingly, property policies tend to exclude the things that are most likely to cause damage while the property is vacant. That means that while the kids are away, the following claims could be denied:
- Theft or attempted theft;
- Broken windows; and
- Water damage
Coverage for other claims like fire and wind damage remains unchanged, regardless of whether someone’s home or not.
Are insurers making exceptions for this emergency?
We have been in contact with the insurers that we work with, and generally, they are sympathetic to the fact that their landlord insurance customers will potentially be faced with major gaps in coverage if the school closures extend beyond 30 days, which seems likely. Here’s what they’ve said:
- Most are asking policyholders to notify them in advance if properties will be vacant beyond 30 days.
- Most are willing to consider extensions to the 30-day vacancy period on a case-by-case basis.
- Some have already indicated that there will be no additional charge.
We will continue to talk to our insurer partners as the COVID-19 crisis evolves, and will provide updates here if insurers update their positions on this issue. To be certain whether or not your rented property is sufficiently protected, talk to your broker. Please stay safe.