Many of us here in Northern Minnesota like our space. It’s not that we’re not neighborly; we just want a little bit of breathing room. So we often buy up the empty parcels of land on either side of us to avoid having homes built a little too close – or maybe just so we can have more outdoor space to enjoy.
But buying this additional property around your home raises a question that you may not have considered: Will your Homeowners policy extend to cover your liability if someone were to get injured on this land and sue you?
There are several ways we could potentially find coverage under your Homeowners policy for your empty land surrounding your home:
First, Homeowners policies cover your “residence premises”. If your adjacent property could be considered to be part of the “grounds” of your residence, coverage should apply automatically. However, to me this seems to be too unclear to rely on.
Secondly, a standard Homeowners policy will also cover any premises you “used by you in connection with” your residence premises. If your additional parcel is connected with the lot that your home is on, wouldn’t this assure that coverage will apply? Unfortunately, this still seems grey in my opinion if the land is empty and really not “used” for anything. And many insurance companies seem reluctant to confirm that they would interpret this provision as covering adjacent parcels.
Third, a standard Homeowners policy covers “vacant land, other than farm land” that you own or rent. At first glance, this may seem to be the provision that clearly indicates that coverage will apply. But not so fast! Courts have concluded that the definition of vacancy means devoid of any man-made structure. So if your adjacent property has a fence, a telephone pole, an old deer stand, an run down hunting shack, any other outbuilding or any other man made structure – it’s not technically vacant and probably not covered by this provision.
And, even if your adjacent land is technically vacant now, what if you put up a small structure later? It could be something as simple as erecting a tree stand or installing a gate to block the access. When you do this in the future, chances are that it may not cross your mind that you have just voided your liability coverage for the property.
At this point, liability coverage for your adjacent property might sound about as clear as the mud that forms on it after a hard rain. And most of us would rather know for sure that coverage applies than to leave it as a surprise after a loss occurs.
This is why the best course of action in many situations may be to go ahead and pay a little extra premium to list the additional parcel on your Homeowners policy. Most carriers will allow you to do this for a small cost – often around $10 or $20 a year. Specifically identifying the property on your policy removes the question mark as to whether any of the provisions discussed above cover your land.
This post specifically addresses coverage under a standard ISO HO3 Homeowners form. Differences may exist in certain other versions of Homeowners policies. In addition, other types of residential policies (such as Dwelling policies and Farm policies) may contain provisions which vary considerably from what is discussed here. Also note that this post is not intended to apply to farm land, land containing building(s) or land used for any commercial or business purpose.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.