by Rich Flynn, ACORD
Have you ever left your home unoccupied for a month or two - maybe you took a long cruise, or had an extended hospital stay? Or perhaps you had to temporarily relocate while your home was being renovated, or while you were trying to sell or rent it; or maybe it's just a vacation home which you only plan on occupying for a few months a year anyway. If there's an accident and that home is damaged while you're away, you may be in for a shock when you file a claim.
"I can name more than 20 instances where American families have lost their homes or suffered significant uninsured losses based on a lack of residency," said Bill Wilson, Associate VP for Education & Research of the Independent Insurance Agents & Brokers of America. "And these are just the denied claims that I'm personally aware of... no doubt there are thousands out there. There is a pressing need to communicate the need to inquire about residency throughout the industry."
Typically, home insurance companies will require policyholders to contact them if they plan to be absent from the property for longer than 30 or 60 days, and may use failure to do so as a reason to reject claims. The ACORD Property & Casualty Forms Working Group is currently considering updating the existing forms for homeowners insurance applications and renewals to ask whether the insured expects to reside in the home for the entire coverage period, but it may be more important to simply make agents aware of this issue, so they can explain it to their clients.
"I immediately thought back to when my wife and I purchased our current home in Michigan, but were still living in Texas," said James Bielak, ACORD's P&C Program Manager. "I paid homeowners on the new place for 3 months while we were selling the old place - we hadn't moved to the new place yet. My agent (at the time) made no mention of the possibility that I'd be denied a claim if the new house burned down before I moved in! More importantly than a checkbox on an app, I'm thinking the agents need education and need to communicate this."
"I have been writing and speaking about this for over a decade, largely to deaf ears," Bill said. "In the meantime, the claim denials continue. The potential uncovered loss can be catastrophic and can ruin a family financially."
Click here to see the IIABA's free whitepaper and webinar on the issue.