A client has an HO-3 Homeowners policy. They leave their home for a 90-day vacation. During their absence, a burglar breaks in and steals several items. The policy includes a 'Vacancy' clause that limits coverage for certain perils if the dwelling is vacant for more than 60 consecutive days. How would the 'Vacancy' clause likely impact the coverage for this loss?
- AThe policy would be automatically canceled after 60 days of vacancy, resulting in no coverage for the theft.
- BThe theft would be fully covered, as the 90-day period falls within the standard grace period for vacancy.
- CCoverage for theft would be excluded or significantly limited due to the 90-day vacancy exceeding the policy's 60-day limit.
- DThe theft would be fully covered, as 'vacancy' typically applies to commercial policies only.
Show answer & explanationAnswer & explanation
Correct answer: C. Coverage for theft would be excluded or significantly limited due to the 90-day vacancy exceeding the policy's 60-day limit.
Homeowners policies, including HO-3, often have 'vacancy' or 'unoccupancy' clauses that limit or exclude coverage for certain perils (like vandalism, glass breakage, or theft) if the dwelling is vacant or unoccupied for a specified period, commonly 60 days. Since the home was vacant for 90 days, exceeding the 60-day limit, coverage for the theft would likely be excluded or significantly limited.
Why the other options are wrong
- A. Policies are not typically automatically canceled due to vacancy, but coverage for certain perils is restricted.
- B. The 90-day period exceeds the standard 60-day vacancy limit, so it would not be fully covered.
- D. Vacancy clauses are common in both commercial and residential policies.
HO-3 Vacancy/Unoccupancy Clause
A provision in an HO-3 Homeowners policy that limits or excludes coverage for certain perils (e.g., vandalism, theft, freezing) if the dwelling is vacant or unoccupied for a specified period, typically 60 consecutive days.
- Limits coverage, doesn't cancel policy
- Commonly 60-day threshold
- Applies to specific perils (often theft, vandalism)
Memory trick: Vacancy: Vacation Longer than 60, Coverage Gone for Some Things