Insurance for settlement

[Kathryn]

Hi,

I just rang an insurance company to get a quote on Home Insurance for a house we've just bought that settles Friday week. Since we're doing a reno and then selling, the house will be unoccupied. I was told that no insurance company would insure an unoccupied house. Should I say it's for rental? I want to be covered in case of fire, etc, but we have no intention of renting it out, just doing it up and selling. Any suggestions?

Cheers,
Kathryn

[Macca]

Hi Kath,

I would go back to the agent who sold it to me, tell him your plans and problem. I would imply that when I had finished the reno I would list with him/her for sale.

In the mean time I would enter a short term agreement as a rental listing with the agent but at an inflated price. I would then do my reno and sell :)

Macca

[Kevmeister]

Surely you can get some kind of builder's insurance? I'm sure there must be houses getting renovated by builders all over the place that require the tenants to move out temporarily, hence the same situation you are in. How are they insured?

Also, if I remember correctly, most policies will cover absence for up to 60 days. Can you get the reno done within 2 months?

Kevin.

[Jas]

You don't actually have to rent it out. all you have to do is borrow a 'for lease' sign, and put it in the window.

Also, double check with the insurer. From the sounds of it, they think you are going to abandon the place.

Jas

[brains]

Jas,

What shes talking about is that her insurance company wont insure the property if it is unoccupied, which it is while she does the renovations.

I had the same problem years ago, I improved the locks and installed an alarm and didnt worry about insurance.

The house was 3 doors away so i could get away with that, if your house is a fair distance away, maybe you should keep looking for insurance. Your call.

[Aceyducey]

Gee,

If I bought a holiday house which would be vacant for part of the year, and decided to renovate that house during that time and then decided to sell it, I'm sure I could get it insured.

Perhaps you should shop around some other insurance agents and tell them only what they ask to know...it could be a matter of too much information or a specific insurer's policy (presumably none of their executives are property investors)

Cheers,

Aceyducey

[rickmick]

Kathryn

My recent experience was that the insurance became null and void if the property was un-occupied for a period of greater than 3 months.

Rick

[investor]

Its true no insurance company will insure you if you tell them that you just want to fix it up then sell. I went through this just 6 months ago.
I called the same company back a few days later and told them them its for rent and got insurance no problems.
The house was unlivable and I sold it 3 weeks ago without even touching it for a good profit. Its still insured until I settle.
:rolleyes:

[Kathryn]

Thanks everyone for your input. I rang a few more companies....and the prices these days are ridiculous...they've almost doubled since last year. I gave them a few "what if" scenarios. If the property is vacant for more than 60 days then it's not covered for certain things, like fire damage. I could say it was owner occupied until we're finished, but again, if it's vacant for more than 60 days I have to notify the insurance company and it disqualifies certain things. At least it would be cheaper than getting Landlord Insurance. Haven't quite decided what to do you....we may be able to finish it in 60 days so we'll see how we go.

Cheers,
Kathryn

[Sim]

Just be a little careful about misleading the insurance company - if you need to make a claim and they send their investigators out, who discover that you did not tell them the truth, then they will not pay out - and you would have paid those premiums for nothing !

In particular I'm referring to the "vacant for X number of days" stuff. But then, if you are actively renovating it, then it's not completely unoccupied is it ? Whatever happens, you don't want to be in the situation of having a chunk of land with a burned out shell on it which is worth much much less than you paid for it - and no insurance to cover your loss because the insurance company is disputing your claim !

[handyandy]

Hi Kathryn

I would have thought that you must get insurance as a condition of the loan. (assuming you are financing the purchase).

Cheers

[Kathryn]

Handyandy, We used our LOC, which is against our PPOR, for the full purchase price so didn't have to have insurance as a condition of purchase.

Thanks, everyone for your suggestions/opinions, etc. Since it won't be tenanted I'm just going to get regular building insurance (as opposed to landlord) if they'll let me. If it takes longer than 60 days we'll either advise the insurance company or just cancel that one and go with another one (assuming we can get another 60 days).

Cheers,
Kathryn