Vacant land insurance
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Vacant land and insurance are less about insuring the owned property from damages and more about insuring anyone injured while on the premises. Vacant land is typically defined by the property’s lack of structures, buildings, and facilities.
At the same time, the vacant land may be used for hunting, fishing, and other outdoor activities. Vacant lots are also defined as smaller than vacant land without many amenities being offered.
Since nothing can be damaged on vacant land, most financial damage to the owner is liability-based risks and hazards. This is one of the lesser-known insurance coverages that may need clarification.
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Why buy Vacant land insurance coverage?
State Liability Laws You Should Know
The laws about who is liable for accidents that happen on someone else's land change from state to state.
In Illinois the general rule is that you're liable for any accidents that happen because of broken or hazardous conditions on your property.
In Texas, the Civil Practice & Remedies Code Chapter 75 gives landowners a bit of a break as long as you're not charging people to come onto your land. But that protection goes away the second you start taking money for access. So if you are renting out your land for hunting then you are going to need to have liability insurance.
California's Civil Code §846 makes liability insurance pretty important if you are giving people permission to use your vacant land for free. Even if someone does get hurt on your property you might still be liable, especially if the land has any features that would attract kids like old wells or swimming holes. Courts call this an "attractive nuisance" and take it pretty seriously.
Indiana follows a slightly different set of rules when it comes to who is at fault in an accident on vacant land. Indiana uses Modified comparative fault, Indiana Law IC 34-51-2. This means that even if you were partially to blame for the accident you are still going to have to pay for part of the damages.
Georgia's O.C.G.A. §51-3-1 requires proof of willful or wanton conduct for them to even consider holding you liable.
How much does Vacant land insurance cost?
Vacant land liability insurance tends to run between $100 to $300 a year for small plots of land used either for waiting for development to start or for personal use on the weekends. But if your land is used for hunting, fishing or has ATV trails then you're looking at an extra $300 to $600 a year because of the increased likelihood of someone getting hurt.
Companies that offer vacant land insurance include USLI (that's United States Liability Insurance Group), Foremost Insurance, American Modern Insurance Group and American Family. Most of their policies will give you a $1 million dollar limit per incident with a $2 million dollar aggregate limit.
If you own a plot of land bigger than 50 acres or have any water features like ponds, lakes or streams then you'll typically need to go through a special kind of insurance company that deals with really high-risk customers like Markel Specialty or Lloyd's of London.
When it comes to figuring out how much you'll pay for your vacant land insurance there are a few factors they consider. They include the size of your land, the zoning classification of your area, what you're allowed to do on that land and even if there's any old buildings or swimming holes around. Installing some perimeter fencing and posting no trespassing signs and making sure you have clear sightlines can reduce 10-15 percent off of your premium with most insurance carriers.
Types of Vacant Land Insurance
Vacant land insurance is more of liability insurance than property coverage. Technically, no property is covered unless assets are kept or used on-site.
Property insurance is entirely unneeded for a vacant land policy unless something is built on it and it’s no longer considered vacant. That’s also good news because that means there is little insurance that makes up such a policy. The following are the most common types of coverage a vacant land policy has.
General Vacant land insurance
This refers to the general liability coverage that applies to vacant land, commonly called Vacant land insurance. While it usually isn’t required by law, lessors of vacant land may require it, similar to a leased car needing additional insurance.
No size specifications exist for land to qualify as vacant; it just can’t have any structures present. Vacant lands like fishing, hunting, or off-roading trails have several annual visitors. There doesn’t have to be an established business; it’s just that the landowner is responsible for anything that happens on their grounds.
As with liability insurance, any medical costs, lost wages, and ensuing legal fees are covered if a visitor is injured while on the premises.
Hunters and hikers may fall and slip down unseen ridges or cliffs. The same can happen to fishermen on wet, slippery rocks by the lake or pond.
That’s why it’s also essential to maintain the area by checking for big dead trees, unseen ditches, and even barbed wire fences marking the perimeter.
Workers compensation insurance
When it comes to workers comp it all depends on where you live and how many employees you have working on your land. In Illinois you have to have workers comp if you have even one part time employee working for you. It doesn’t matter whether you hire them directly or go through a contractor. Texas on the other hand doesn't make workers comp mandatory but most commercial liability companies will still require it. In California you don't have to have workers comp until you start paying more than 100 dollars in annual wages to an employee.
Even if you don't have to have workers comp it's still a good idea to have a plan in place in case an employee gets hurt on the job. If you're found to be negligent in the hiring process you could still get sued for the injuries of an uninsured contractor. Make sure any contractor you hire has their own liability insurance and workers comp coverage before they ever step foot on your land.
If you do hire any full-time hunting or fishing guides then it's a good idea to make sure they have workers comp coverage. W-2 employees are always required to have workers comp but contractors are pretty much on their own. Carriers like Hartford, Travelers and AmTrust specialize in workers comp policies for agricultural and land management operations with premiums based on payroll and job classification codes.
What Vacant Land Insurance Doesn't Cover
When you get a standard vacant land policy you'll still have gaps in your liability coverage. You can usually buy additional coverage for the stuff that's excluded that is listed below.
Pollution liability - if your land has underground storage tanks or you're worried about contamination from your neighbor, you'll need a separate policy for environmental damage. AIG, Chubb and Zurich all offer pollution coverage for land that's been polluted.
Timber operations - if you're actively logging, harvesting timber or running a forestry operation you can't get a standard vacant land policy. You'll need to get a specific policy for forestry liability from companies like Pennsylvania Lumbermens Mutual or Forestry Mutual Insurance.
Commercial farming - if you're using your land to grow crops or graze livestock you need a farm liability policy, not a vacant land policy. That's where Farm Bureau, Nationwide Agribusiness or Rain and Hail come in.
Mining or extraction - If you're mining, quarrying or extracting gravel you'll need coverage that goes way beyond standard liability.
Intentional acts - If you, or someone that was allowed onto your land, does something that hurts someone you're not going to be covered for it.
If you've got a really valuable property or a whole lot of liability exposure you might also want to consider a personal umbrella policy. RLI, Chubb and PURE all offer policies starting at $1 million that extend your vacant land liability coverage.
Additional types of Vacant land insurance
Auto insurance
If landowners keep vehicles they own on the vacant land, they can more than benefit from comprehensive car insurance specifically. This can also be the case for off-road vehicles guests may use on the land.
Comprehensive car insurance can be added to any auto policy to provide financial protection if the vehicle is stolen or vandalized. Naturally, standard car insurance is required, but fuller car insurance like this is optional.
Homeowners Insurance
Standard homeowners policies usually cover adjacent vacant land. Adjacent land is defined as within 1,000 feet or on the same tax parcel. So if you have a home and some vacant land right next door then your homeowners policy will probably cover any accidents that happen on that land. You would get about $100,000 per occurrence if something goes wrong. But that's not usually enough coverage for larger plots of land.
If you have a separate plot of land that is not right next to your home then you probably won't get that homeowners extension. If you're buying a plot of land with the intention of building something on it then you should check your homeowners policy to see if it'll cover the construction phase. Most home policies won't cover the building process. You'll need a separate builders risk policy.
Policies from Zurich, CNA and Travelers will give you both builders risk and homeowners coverage when you're done building.
Questions Underwriters Ask
When you apply for vacant land insurance your insurer will want to know several details about your vacant land. Listed below is the information you need before you start applying.
How big is your land and what's the shape of the parcel?
What's the zoning on your land, residential, farm use, commercial, recreational?
Do you have any water features on your property, ponds, lakes, streams or swimming holes?
What do you allow on your land? Hunting with what sort of gear, fishing, camping, ATV use?
Is the land open to the public in any way?
What's on the property, barns, wells, docks, tree stands?
Anything on the property that might attract kids or other unwanted visitors like old equipment, wells, cliffs, quarries?
What's your history with claims on the property?
Do you get paid to let people onto the land for things like hunting or agritourism?
Having all this info ready will cut down on the underwriting process and make sure you get the right price.