Property Insurance
An insured permanently moves out of his dwelling on March 1 and takes all furnishings with him. On May 15, vandals break into the empty house, spray graffiti, and damage interior fixtures. How will the insurer handle the claim under an unendorsed HO-3 policy?
- ADeny the loss because coverage automatically cancelled thirty days after the owner vacated
- BDeny the loss because the dwelling was vacant for more than 60 consecutive days prior to the loss
- CPay the claim in full because vandalism is a covered peril on an open-peril dwelling form
- DPay the claim subject to a statutory fifty percent reduction in the policy dwelling limit
Not A. Vacancy does not automatically cancel the policy after 30 days.
B is right. Standard homeowners policies, including the HO-3, explicitly exclude losses caused by vandalism and malicious mischief if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. March 1 to May 15 is 75 days of continuous vacancy without occupants or furnishings. The policy remains in force rather than automatically cancelling, but coverage for specific perils such as vandalism is suspended.