Due to the sagging real estate market of several years ago, many homes that were put up for sale often remained vacated. Sellers, unable to find buyers, had no choice but to leave these properties vacant for months on end. Unfortunately for those owners, an insurance provider would likely drop their insurance policy coverage under these circumstances. This is due to the simple fact that empty homes provide much greater risks according to most insurance experts.
Homeowners looking to insure a vacant home typically have the option of either buying an endorsement to their existing homeowner’s policy or purchasing a separate “vacant home” insurance policy, often available as special coverage through insurance companies in Connecticut. This is important since a vacant house appeals to thieves, as well as vandals, or squatters looking for shelter, particularly in areas with inclement weather.
Vacant homes also present numerous liability issues, including the possibility of injuries to persons while on the property. There’s the likelihood that neighborhood kids might discover that a house is empty and could wind up climbing over a fence and getting hurt. Older kids will often use a vacant home as a place to party and could break windows and be severely cut by broken glass.
Neglected properties also need to be covered
If you know that a house that you own is going to be vacant at some point you should notify the existing insurance agent of the change in the home’s status. This way, they can discuss your options with you, as opposed to you simply assuming that any existing homeowner’s policy will provide coverage under these circumstances.
Most policies have exclusions for homes that have been neglected, or abandoned, so that when a homeowner is not living in their home and doesn’t notify their insurance agent or company that the home is sitting vacant, any claim for property damage or liability under the homeowner’s insurance policy will likely be excluded. As a homeowner you should understand that an existing policy’s terms no longer apply once there is a change in status.
Other insurance options are often available to you. There are insurance companies in Connecticut that offer such endorsements. Most standard policies most likely will not cover certain types of damage once a home does become vacant.
Recovering from the economic recession has not been an easy task and the journey to a full recovery is by no means over. No industry has felt this more than the housing industry, which has made leaps and bounds toward that full recovery, but has recently stagnated.
Currently, only 10 states, as well as the District of Columbia, fall into a stable range. This means that only approximately 20% of the United States’ housing market is considered stable, compared to 90% at the same time last year. As the housing market continues to waver, it is important for you to avoid mistakes that would require real estate errors and omissions insurance.
First, ensure that you are covering your bases when you take on a new client. One of the easiest ways to ensure use of real estate errors and omissions insurance is to participate in discrimination against a client for whatever reason. Even if it is not bad intentioned, purposefully pushing a client toward or away from a particular neighborhood based on that neighborhood’s demographics is a sure way to open the door to a lawsuit.
One way to easily avoid this is to make sure that you are showing the client a variety of houses in a variety of different neighborhoods, regardless of the demographic makeup so that the client can make the decision themselves about whether the demographics of the neighborhood are important to him.
Another potential area for lawsuits lies in pretending to be an expert in an area that you’re not, such as financial advising or home inspecting. It is not your job to give advice in this area if you do not have the expertise because the home owner could come back and force you to have to utilize your real estate errors and omissions insurance by saying that you gave them misinformation.
There are many other factors to look into as a real estate agent, but these are a couple of the major ways that you can avoid a lawsuit based on your own, probably unintentional, error.
Understanding the types of insurance coverage available today is important for any professional who works in a field with a high degree of risk or large financial assets. For people working in real estate, errors and omission insurance, or real estate E&O insurance, is often viewed as an essential kind of coverage. This insurance offers a degree of protection against the charges of negligence or professional failings that many professionals will face over the course of their careers.
The Basics of E&O Insurance
Errors and omissions insurance provides for the cost of legal defense against charges of professional negligence and the cost of any damages that are awarded. E&O can cover charges stemming from accidents on the part of the professional, including mistakes or inadvertent admissions. An E&O policy will also protect professionals against the costs of groundless charges made by clients.
Do Real Estate Professionals Need Additional Coverage?
The needs of each agent and firm can vary, which is why speaking to an insurance agent about any policy decisions is best. Some real estate E&O insurance policies offer more extensive coverage than others; for instance, some policies may cover claims made before the policy began, and others may cover issues that originated during coverage but were discovered afterward.
A good real estate E&O policy can often provide sufficient coverage for firms and brokers. However, real estate professionals who are in doubt should speak to a professional about the terms of their current policy, potential gaps in coverage, and any complementary policies that could further reduce financial risk.