According to the Wall Street Journal, more and more of your clients either have or will soon be acquiring second, third and even fourth homes. Whether they live in these homes themselves and/or rent them out to others, good for them and good for you!
You as their agent can do your clients a real service by suggesting ways they can protect their homes and themselves from any liability those homes may inadvertently cause.
To determine the appropriate entity or “Title” for the property, suggest that your client contact an attorney in the state where the property is located. Each state has its own laws and regulations regarding Title. And each state may favor a entity such as Joint Tenancy, Corporation S, Limited Liability Corporation or LLC.
Insurance for the home needs to reflect how your clients intend to use the new home…vacation home for their personal use, full-time occupancy, long/short term rental. For example, if the home is rented out long term for anywhere from six to twelve months, the home becomes “tenant occupied.” If the home is listed under vacation rental sites such as VRBO or Airbnb, there is different exposure.
Laurie Haas, vice president of private risk services with Lovitt and Touche insurance brokerage, advises, “Remember, a personal policy is just that…it is intended for personal use…it is important to ensure that you have secured the right type of policy to cover the home in the event of loss…a negligent act on your property could have devastating consequences…and it’s next to impossible to implement effective protection of exposed assets …after the occurrence of an event.”
One last thought from Haas. The real value is in the loss settlement provision and features and benefits of your policy, not the cost.”
Things your clients can do themselves to protect their 2, 3, 4 homes:
- Make sure the electrical and plumbing systems are up to date.
- Thermostat settings – in warmer climates, set the air conditioning at no more than 85 degrees; in cooler climates, set the heater at no less than 55 degrees.
- Protect the plumbing – pipes can burst, freeze, leak so turn off the water when you leave (although the fire sprinkler system will shut off when the water is off), flush all the toilets and drain the shower heads.
- Insulate the pipes in the garage and basement.
- Consider installing an electronic leak detection system.
- Unplug all computers, TVs, toasters, coffee makers, etc.
- Trim dead tree limbs and shrubbery and store outdoor furniture so nothing flies away or breaks a window in the event of high winds.
- Close/lock the doors/windows/vents and deadbolt thoroughfare doors.
- Make the house look lived in with light timers, install motion sensors, hire someone to clear snow/debris from walkways and driveways.
- Tell police when a property is vacant/occupied.