When it comes to real estate, it takes a rare eye to look beyond boarded-up windows, graffitied walls, and broken shutters to spot a diamond in a rough—and those gems are becoming scarcer. It’s a seller’s market, as inventory diminishes and demand begins to outstrip supply.
Close to one out of every 63 residential properties in the U.S. is vacant, according to a RealtyTrac report released in February that ranked metropolitan statistical areas with the most and least empty houses. That’s a 9.3 percent decrease from the last residential property vacancy analysis conducted in the third quarter of 2015—posing a challenge in cities where there’s a lot of housing demand:
“With several notable exceptions, the challenge facing most U.S. real estate markets is not too many vacant homes but too few,” said Daren Blomquist, vice president at RealtyTrac. “The razor-thin vacancy rates in many markets are placing upward pressure on home prices and rents. While that may be good news for sellers and landlords, it is bad news for buyers and renters and could be bad news for all if prices and rents are inflated above tolerable affordability thresholds.”
In other words, vacant buildings are rare business opportunities nowadays—and they need special consideration when it comes to insurance.
Vacant building coverage is typically not something your standard market carriers look to insure, making working with specialty markets that fully understand the nuances of a vacant building extremely important. They will provide critical coverage like Special Form, which casts a much wider net of coverage for property loss, rather than Basic, which only covers named perils such as damage from fire, wind, lightning, vandalism, etc. Even more critical is coverage for theft and vandalism, the most common causes of loss for an unoccupied building. Failure to cover these exposures on vacant buildings can result in claim denial and potential exposure to your Errors & Omissions coverage.
Equally important is working with a vacant building market that can provide a quick, accurate coverage offering summary and quote with a financially strong carrier. Visit distinguished.com to learn more.