Loss of Rent Insurance when property is vacant??

Question

Hi,

After few months of rehab on a duplex I was ready to rent both units, and just a few days after I listed each unit for rent my pipes burst due to the cold weather leaving both units significantly damaged. I was wondering if the "loss of rent" insurance applies here? As I would have been able rent them out and receive income and now it's going to be at least another couple months of construction..

Any insight would be great.

Thanks,

Bill B. · Answer

Yeah, and assuming the heat wasn’t turned off for some reason you have a possible lawsuit against the rehabber. There is zero chance pipes should burst in a freshly remodeled property if the heat is on. If you’re lucky your insurance company will go after them for you (as they caused the loss) and reimburse your deductible. (Allstate has done this twice for me against 2 different toilet supply line manufacturers.). Hopefully they pulled permits and built to code or have their own insurance to cover themselves. Otherwise some cities have funds that all contractors have to pay in to cover bad jobs. Good luck.

Ps. After I finished my post I remembered you also need to make sure your insurance is valid if the property is vacant more than 30-60-90 days. Some insurance companies don’t cover vacant properties and make you buy a specific empty property insurance which is much more expensive as they’re afraid water leaks in an empty property will do extra damage before being discovered. Check your policy declarations.

Owen Rosen · Answer

If you purchased proper insurance that indicated the duplex was vacant and under construction it's unlikely "loss of rent" would be included in such a policy since there is no rent unfortunately.

If your insurance didn't indicate the property was vacant and under construction that could be another issue altogether but you didn't actually have any lost income so coverage would not likely apply.

In general, it's ultra critical to speak with your insurance agent about vacancies as related to insurance before a claim. This includes vacancies at the start of a policy or mid-term. Get answers in writing when possible.

Shafi Noss · Answer

The fact that there was no tenant in the property muddies the water. I think in this case best thing to do is look at the language in your policy. Hopefully your normal insurance recovers the water damage though!

Loss of Rent Insurance when property is vacant??

Loss of Rent Insurance when property is vacant??

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