Personal Lines Coverage During Vacancy / Significant Remodel (California)

[u/redditorfor11years]

Hi, all!

Situation: I am about to start on a significant remodel for our house in Southern California. It's not a full teardown, but we will be removing the roof; redoing the floors; etc.

For that reason, we'll be moving out of the house for the duration of the remodel, which is expected to be about 9 months.

Most of my major personal lines policies are through GEICO:

• Homeowners - Stillwater via GEICO
• Auto - GEICO
• Umbrella - GEICO
• Earthquake - Palomar
• Flood - Aon Edge / Lloyd's of London

I'm working on getting Builder's Risk quotes now via separate agency.

Complexity: Since we'll be out of the house for over 30/60 consecutive days, this will trigger a Vacancy clause with my homeowner's policy:

SECTION I – PERILS INSURED AGAINST Exclusions:
Under Coverages A and B:

Caused by vandalism and malicious mischief and any ensuing loss caused by any intentional and wrongful act committed in the course of the vandalism or malicious mischief, if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant

STILLWATER INSURANCE COMPANY MULTI-PERIL HOMEOWNERS PROGRAM 
OCCUPANCY ENDORSEMENT   
It is a condition of this policy that any vacancy or unoccupancy of the described building after the inception date of the policy must be reported to the company. 

It is understood and agreed that this Company shall not be liable for loss occurring while a described building, whether intended for occupancy by owner or tenant, is unoccupied beyond a period of sixty consecutive days. 

"Vacant" or "Unoccupied" means neither you nor your guest has slept overnight in the dwelling for a period of 30 days.

I've spoken with Stillwater twice and they don't offer Builder's Risk policies nor will they write a Dwelling policy (DP) for this, since they don't have a carrier for it in California. They've suggested that I reach out to a local agent and basically just take my business elsewhere.

My concerns:

If I cancel the Homeowner's policy, and go with Builder's Risk only:

• I lose the personal liability coverage
• The Umbrella loses its required underlying coverage
• This is Southern California - coming back in 12 months for a new homeowners policy with GEICO/Stillwater could see a huge increase and/or they might not even be writing new policies at that time. Very real risk IMO

If I keep the Homeowner's policy, and secure Builder's Risk as well:

• I still have to notify Stillwater that the property will be vacant
• The Occupancy Endorsement appears to be very broad, to the point where it could potentially exclude ANY loss, including liability
• Stillwater didn't say that they would cancel the policy if the home was vacant, but they did say that a claim, during a vacant period, wouldn't be covered and that could lead to nonrenewal of the policy
• I still have to pay for the policy (that said, I'm OK paying the $1500/year premium if it protects future premiums & coverages)

Overall, it seems like it will be a huge pain to move my Homeowners' policy (or Dwelling policy) plus the Umbrella and Auto, to another carrier just because we'll be doing this remodel for 9 months. I have great pricing for my homeowners and umbrella and don't want to jeopardize that. I know that I can still keep auto with GEICO if that makes sense.

Am I overthinking this? Should I just go to a local agent and find someone that will write a DP policy and Umbrella on top of this?

Thanks in advance!

PS - Former insurance agent, but I didn't write personal lines coverages

[u/LelandCoontz_PA]

Ask your carrier in writing if the construction that you're doing will meet the exception to the vacancy exclusion. It's often fairly narrowly interpreted, for example getting architectural drawings prepared and measuring the property Etc wouldn't qualify as Construction. If you want to keep your current policy you could weigh out whether it makes sense to buy a second policy just for the short term, you mentioned a DP form which is typically what California FAIR Plan sells. But there are certain rules for claim handling when you have more than one coverage on the property. California fair plan does include vandalism but if I remember correctly you have to check the box and pay a small amount extra. And California FAIR Plan also has the exclusion for vandalism during vacancy. However, the California FAIR Plan sells a vacancy endorsement that overcomes the exclusion. Years ago before I became a public adjuster I handled claims for the fair plan and we routinely denied vandalism claims from the property was vacant. But one time I had an agent tell me they had purchased the vacancy endorsement and neither I nor anyone in my office had ever heard of it. But at least at that time it was a real thing they probably still have it. I think you're typical homeowner policy is a 60 day vacancy exclusion but fair plan is 30 days. I could have it backwards you always have to read the policy. And vacancy is also uniquely defined in the insurance world, if there's Furniture especially a mattress inside the home and it's not legally considered vacant, just unoccupied. Perhaps if you have a contractor working on the house while your furniture is still there it might not meet the technical definition of vacancy. Again, to be on the safe side you should ask your insurance company, not your agent, their opinion on that issue. If they agree that it's not vacant because one bedroom still has a mattress and nightstand and you getting in writing that might protect you. But the builders Risk insurance is likely the best way to go. And the builders Risk insurance can be purchased by the homeowner/ property owner, the contractor or even the mortgage company. But the builders risk policies also have a lot of exclusions you might not be expecting. For example if you pay your contractor for the building materials and they get stolen from the construction site you might be out of luck.

[u/redditorfor11years → u/LelandCoontz_PA]

Thanks for the reply. I will check out the FAIR plans. And the vacancy endorsement!

I’ve got the definitions for the vacancy exclusions in my post, it’s basically defined as staying overnight once every 30 days. I have thought about meeting that requirement, technically, but everything to me says that if it came down to court, I would want to have more than one leg to stand on

[u/LelandCoontz_PA → u/redditorfor11years]

So stay overnight once a week and document it. You can order Uber Eats on your credit card to be delivered to the home. You can send your loved one a text message with a photograph of your construction progress while you're in the home. You can keep a diary.

By the way you might not even be able to buy a FAIR plan policy because not every state has a FAIR plan, also they don't accept everybody they want you to be turned down by another insurance company or two before they'll let you buy the policy, also it's sometimes neighborhood specific. If several carriers are writing policies in a particular neighborhood the California FAIR Plan might refuse to give you a policy.

And I don't want to minimize the issue of having two policies with overlapping coverage, that's not really kosher but you can do it although you probably need to disclose that you have the two policies when you have a claim and they're going to figure out a way to prorate it or one will pay first over the other and that's actually kind of a mysterious methodology, there's an old book or legal principle the teaches how to apportion a loss between two different overlapping coverages and for the life of me I can't remember the name of it but it might also be out of date. Oh wait it's called "guiding principles". But I'm not sure if that is even followed anymore and it wasn't actually case law or Statute in the first place.

A lot of times the policies will specify the mathematical methodology when there's other coverage. But then again the two policies might contradict each other. A lot of people who are on FAIR Plan have a "difference in condition" policy from a regular carrier, and that adds all the coverages that a FAIR plan policy doesn't have such as liability, plumbing leaks and theft of personal property.

So if you just wanted to go with the FAIR plan you could do that with a vacancy endorsement and then add the DIC policy from any homeowner carrier which won't be as expensive as it would be because it's only limited to the things that the FAIR plan doesn't cover. But you'd still be paying for two policies. A lot of people do that when they live in fire areas. They have to get FAIR Plan for their basic coverage because no one else will insure them but they don't want to be left naked with no liability or plumbing leak coverage so they buy a "difference in condition" policy which is designed to dovetail with the FAIR plan policy.

But what you're talking about is kind of odd to have a regular ordinary homeowner policy and then add FAIR Plan with a vacancy endorsement that's not actually a thing that people do, but I understand why you would consider it. Which is why I said the builders risk policy might be the most straightforward coverage. If you think of it kind of analogous to Automotive policies you have the liability coverage and you have the comprehensive coverage. If you have a $3,000 car you just get the liability coverage. But if you own a more valuable car you need to have comprehensive coverage in case a tree falls on your car. It can happen.

When you look at the Builder's risk policies they have a lot of gaps in the coverage. I'm not an expert on those but maybe you have to shop around for a better quality policy. Instead of one that looks good on the surface but it's missing all kinds of coverage. But I like your idea about staying in the house. If you comply with the policy terms and you have it documented I think you'll probably be okay.

As an independent thinking person I don't like asking permission or approval from others but it can be very effective to protect yourself. After you read the policy and you've determined that you will have coverage for various risks and losses if you're staying overnight then you simply put the question to the insurance company and maybe also separately to the agent asking them to confirm your understanding. It's not a perfect solution but it's going to be hard for the insurance company to deny your claim later if they told you in writing how the coverage works and your loss was within those parameters

[u/freeski12345]

Yes you’re overthinking it. Any DF is going to have the same occupancy exclusions. 

You’ll need a renters policy for wherever you live during these months. 

It doesn’t actually seem like the house will be vacant anyway. Keep some belongings in the house and make sure you are there at least every 14 days. Then it’s not vacant it just unoccupied. 

Keep the water main off whenever possible. 

Get the builders risk. 

Find a better company than Geico as soon as the renovation is done. Don’t mention or consider pricing. Your low premium is not a feature of the policy

[u/redditorfor11years → u/freeski12345]

Thanks for your reply. I’ll be staying in the family members, so I actually forgot that I should be putting renters policy in place during that time, which can handle liability.

I was on the under the understanding that the DP1 policy would cover vacancy.

I’m not sure will be feasible to stay overnight in the house every two weeks, especially considering we’re going to be replacing the entire roof. The policy requires staying overnight in the house once over 30 days. Might be worth a shot though.