The Vacancy Clause: When an Empty House Becomes Uninsured

Life is full of transitions. You might move into a new house before your old one sells. You might inherit a parent's home and take months to clear it out. You might buy a fixer-upper and wait on permits before moving in.

In all these scenarios, you have an asset—a house—that is sitting empty. You continue to pay the mortgage and the insurance premium, so you assume you are covered.

You are likely wrong.

Hidden in the "Conditions" section of almost every homeowners policy is a provision known as the Vacancy Clause. It states that if a home is left vacant for a specific period of time—typically 30 or 60 consecutive days—coverage is drastically reduced or completely suspended.

Why? Because an empty house is a magnet for trouble. Without someone there to notice a small leak, it becomes a flood. Without someone to deter thieves, it becomes a target for vandalism or squatters. Insurers hate this risk.

If you are managing an empty property, ignorance of this clause can lead to a total loss denial. This guide explains how the vacancy clause works, the difference between "unoccupied" and "vacant," and the specific insurance products you need to protect an empty nest.

Vacant vs. Unoccupied: A Legal Distinction

Insurers distinguish between these two states, though the definitions vary by policy.

• Unoccupied: The house contains furniture and personal property, and it looks like someone lives there, but the residents are temporarily away (e.g., a long vacation or a hospital stay). Standard policies usually cover this, provided you take steps like maintaining heat (as discussed in our frozen pipes guide).
• Vacant: The house is empty of personal property. There is no furniture, no food, and no intention to return in the immediate future. This is the danger zone.

What Happens at Day 31? (The Coverage Cliff)

Once the vacancy clock hits the limit (usually 30 or 60 days), two things happen automatically:

1. Specific Perils are Excluded: Coverage for Vandalism and Glass Breakage is almost always removed immediately. If kids break in and spray paint the walls, you get $0.
2. Total Suspension: In some policies, all coverage is suspended. If the house burns down on Day 61, the claim is denied.

Common Scenarios That Trigger the Clause

• The Slow Sell: You move out, stage the house with minimal furniture, and it sits on the market for 3 months.
• The Fix-and-Flip: You buy a house and spend 4 months renovating it before moving in. (See our renovation guide for more).
• Probate: A parent passes away, and the house sits empty for 6 months while the estate is settled.
• The Snowbird: You leave your northern home entirely empty (no furniture) for 4 months.

The Solution: Vacant Home Insurance

You cannot just rely on your standard HO-3. You have two main options:

1. The Vacancy Permit (Endorsement) If the vacancy is short-term (e.g., you are selling the house), your current insurer might agree to issue a "Vacancy Permit."

• What it does: It extends coverage for a specific time period.
• The Cost: You will pay an additional premium.
• The Limits: They may still exclude vandalism or water damage. You must read the terms carefully.

2. A Standalone Vacant Home Policy If your current insurer won't issue a permit (many won't), or if the vacancy will be long (6+ months), you need a specialty Vacant Home Policy.

• Specialty Carriers: Companies like Foremost, USLI, or VacantExpress specialize in this risk.
• Pro-Rated: These policies are expensive (often 50-100% more than standard insurance) but can usually be purchased for 3, 6, or 12 months and cancelled pro-rata. If you sell the house in 2 months, you get the rest of the premium back.
• Vandalism Coverage: You can specifically buy back vandalism coverage, which is the most likely claim you will face.

Conclusion

An empty house is a vulnerable asset. The Vacancy Clause is not a loophole; it is a standard risk management tool for insurers. If you have a property that is sitting empty, check your policy's definitions today. Count the days. If you are approaching that 30 or 60-day mark, call your broker immediately. Buying a vacant home policy is annoying and expensive, but it is far cheaper than paying a mortgage on a burned-down house that your insurance company refuses to pay for.