Vacant Land: What is on that land that god did not put there

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By Phyllis Van Wyhe, CPCU, CIC, CSP

Printable Version

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By reading the definition of insured location we discover there are several premises covered for liability under the homeowners contract. Coverage is automatically provided for:

• The dorm room
  
• The banquet hall
  
• The rented mini-warehouse
  
• The one or two family dwelling being built as a residence for the insured
  
• The grave marker or burial vault
  

The definition of insured location also extends liability coverage to vacant land, that is owned or rented to the insured.  There are two considerations here, both equally important:

• FARM LAND
  The minute the soil is turned to plant a crop or cattle are moved on for grazing, the land becomes farm land and liability coverage evaporates.  Many agents ask the number of acres when writing any property outside the city, find out what is on that land, and then periodically remind the insured of the farming exclusion.

• VACANT LAND
  The insured mentions the land he owns up north and tells you it is vacant.  You later discover, at the time of claim, there is actually something on the property - a fence, a well, an outhouse.

The word "vacant" is subject to interpretation.  The insured’s definition can be substantially different from that of the claim’s adjuster.  Different companies, using contracts with identical wording, can vary in their interpretation of the word.Unfortunately, when a client and the insuring company disagree, it is the courts that make the final determination.  Whenever the courts are asked to resolve an issue there is substantial expense involved.

The problem can be averted if the agent asks a follow-up question.  Whenever the insured tells you about vacant land ask the follow-up question: "What is on that land that God did not put there?"  You may well uncover the Christmas trees grown for sale, the organic vegetable garden, and the hunting shack.  A call to the underwriter will determine if the company writing the homeowners contract can still cover the exposure.  Often it is simply a matter of adding a very inexpensive endorsement.

This article is excerpted from the book 20 Key Questions To Ask When Writing A Homeowners, written by Phyllis Van Wyhe, CPCU, CIC.