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Insurance Vacancy Limitation: Property Cover Limitation in Tennessee | Legal insurance blog about property insurance



According to ATTOM Data Solutions, a property database curator, Tennessee is currently tied to the highest total vacancy rate for all residential properties during the first quarter of 2021. 1 This number is likely to increase if the moratorium on exclusions on March 31, 2021 under the current CDC and the Department of Health Order. 2 Landlords and policyholders should, however, be aware that leaving their property for too long may lead to a limitation of insurance coverage.

Most insurances, both residential and commercial, have a leave clause which in part stipulates that losses caused by theft, vandalism or water damage are not covered if the premises have been covered. "Vacant" or "vacant" for a certain period of time. Furthermore, the coverage for other losses, such as fire or storm, is reduced by 1

5%. In the latest case Johnson & Associates v Hanover Insurance Group the Tennessee Court of Appeal noted that "

Leave provisions are defined in the policy and usually require 60 days of absence before the date of loss. Attendance problems generally arise in commercial policies and are usually defined as the closure of customary business regardless of the presence of business personal property. In Johnson & Associates the vacancy period was defined as when a certain percentage (31%) of square meters of the building was no longer used for normal activities. 4 As the policy varies, policyholders should be aware of the specific language of their policy.

Interestingly, Tennessee courts have ruled that leave clauses "should be interpreted in the light of the circumstances in which the policy was issued." 5 And, a vacancy restriction is followed "if the insured property is used for the intended use of the parties, as expressed in the insurance contract." 6 If a policyholder's rental property is vacant and the insurance company knew that this fact at the time the insurance was issued covers the property and the leave clause is repealed. 7

What happens if the property is now within this vacancy limit, ie. after 60 d are they described in most policies? In Tennessee, this only serves as a suspension of coverage, which can be revived with a subsequent coating in politics. 8 In other words, the policy remains valid but inactive until the coating is restored, which then triggers full coverage during the original policy period.

Business owners and landlords need to be aware of the policy conditions needed for their specific purposes regarding potential vacancy issues. Permit certificates are also available. However, these options often offer reduced coverage, such as including actual cash value or limited risk coverage. 9 Although issues related to this vacancy restriction are nothing new, they are becoming more common.
______________________________________________________________________ [19659011] 1 Vacant zombie traits remain a small factor in the US housing market in the midst of ongoing foreclosure moratorium ATTOM DATA SOLUTIONS (February 25, 2021), https://www.attomdata.com/news/market -trends / attom-data-solutions-q1-2021-vacant-property-and-zombie-foreclosure-report /
2 CDC and health department for temporary stop for housing evictions to prevent further spread of COVID-19 ( 29 January 2021), https://www.tn.gov/content/dam/tn/health/documents/healthy-places/healthy-homes/CDC-Eviction-Moratorium-01292021.pdf [19659011] 3 Johnson & Associates, LLC v Hanover Ins. Group, Inc. 572 S.W.3d 636, 642 (Tenn. Ct. App. 2018), citing Providence Washington Ins. Co. v. Stanley 403 F.2d 844, 849 (5th Cir. 1968); Sofa on ins. § 94: 102.
4 Id. at 639.
5 Id. citation Couch on Ins. § 94: 110.
6 Id. at 642-43, citing Winston-Salem Fire Fighters Club, Inc. v. State Farm Fire & Cas. Co. 131 S.E.2d 430, 434 (1963).
7 Couch on Ins. § 94: 151; McCaleb v. American Ins. Co. 325 S.W.2d 274, 277 (1959).
8 Carolina Ins. Co. of Wilmington, N.C. towards St. Charles 98 S.W.2d 1088, 1092 (Tenn. Ct. App. 1936).
9 Nicole Yarbrough. Understanding – and avoiding – the leave clause . Independent Agent (November 2012), https://rms.iiaba.net/Resources/Pages/Publications/Angles/2012/11-12-EO-Angle.pdf.


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