Insurance companies generally provide lower premiums for an owner occupied house than a vacant house or a rented house. When it is owner occupied the insurance company envisions more care, whether it be checking on the boiler, preventing a fire, or clearing off the front steps to avoid a visitor’s slip and fall. Insurance companies require in applications that the insurer provides any change in the circumstances of the occupancy of the property. It would be a mistake to not notify the insurer so as to avoid an increase in premiums. The reason you have insurance is primarily for that big potential loss or a liability claim. In those circumstances the insurance company will review the situation to see if the insured has been honest with the insurance company. Not only is it the right thing to do to inform the insurance company of the change in circumstances, but it is also in your self-interest to do so. Paying a lower premium and then finding out you do not have insurance coverage is throwing money away.
An example would be if someone close to you passes away and you are appointed as the person in charge of his estate or are the trustee of his trust and that individual owned a home, which may be vacate for a while until it is put onto the market for sale. During that period of time when the home is on the market, it would be prudent to contact the insurance company to let them know of this change in status and see what they want to do. The insurance company may, for a certain grace period, acknowledge that while the house is vacant there may not be a change in the premiums, but that is for the insurance company to decide after full disclosure. Another example is if you get a new work assignment that has you out of your home for a couple years, it may make sense for you to rent your house for a period of time knowing that you will eventually return. However with your home now rented the insurance company treats it differently and if someone is hurt on the premises while you have renters, if the insurance company still thinks the house is owner occupied because you did not inform it of the change, you may not have liability coverage for the accident or if a fire occurs you may not have casualty insurance for that loss. Once again, it is important to contact the insurance company in writing to let them know of the change in circumstances to see what the insurance company wants to do. Your agent should be able to help you in that regard.
J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].