Thursday, December 4, 2014

Do You Need Liability Insurance On A Vacant Lot

Insuring your vacant land can save you money in the long run.


Having the right type of insurance coverage can mean the difference between peace of mind and costly court proceedings. Determining get the best policy can be confusing, especially when it comes to insuring a vacant lot. While the risk of an accident happening on an empty parcel of land may seem low, making an informed decision about obtaining coverage could save you thousands of dollars over time.


Function


Liability insurance covers injuries or damages to other people caused by the policyholder or occurring on the policyholder's property, according to the National Association of Insurance Commissioners. This type of insurance specifically covers legal fees and damages related to claims, and does not cover the costs of repairs to property should a disaster occur. Because of these limitations, do not use liability insurance in place of hazard insurance or a homeowner's policy.


Considerations


No specific laws mandate that you must obtain insurance on a home or lot, but if the land is being financed by a bank the loan documents will almost certainly state that coverage is required. You must decide whether or not to cover a property if it is not under financing.


Benefits


Investing in insurance for a vacant lot is often worthwhile. An accident is much more likely to occur if the parcel is located within a developed community. If an accident were to happen, court costs and damages would be considerably greater than the cost of the premium in most cases.


Warning


Waiving insurance coverage in any form exposes you to the risk of legal action should any incident occur on your property. Be aware that if a property contains fencing or any other structure, it is not considered a vacant parcel and may need coverage under another type of policy. Speak with a licensed insurance agent to confirm what category a property falls into if there is any doubt.


Obtaining Coverage


Insurance companies can extend your existing homeowner's policy to include any vacant parcels of land owned under your name. If you have an HO-3 policy, this coverage is automatically extended to any vacant lot owned in the United States under your name. Other types of homeowner's policies may extend this coverage at a nominal cost.

Tags: homeowner policy, insurance coverage, this coverage, type insurance, under your, under your name