Haunted houses are a celebrated part of American folklore. In Massachusetts sits Lizzie Borden’s home, a surviving testament to the little girl who supposedly slaughtered her parents with an ax in the dark of night. In New York’s Greenwich Village, 22 different ghosts haunt the “House of Death,” including famed author Mark Twain. Even the White House itself is rumored to be haunted.
Americans love their horror stories, devouring Hollywood retellings of real-life ghost stories like American Horror Story: Murder House, The Haunting of Hill House and The Conjuring.
However, it’s a bit of a different matter when it happens to you.
Haunted houses are a subject that sparks much passionate debate among believers and non-believers, but a haunted house could have serious implications for your homeowners insurance. Here’s why.
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What Makes a House “Haunted”?
These are some of the signs of a haunted house:
- Movement of objects
- Puffs of air
- Cold air
- Unexplained noises, voices or smells
Pets are also known to be sensitive to spirits and can help you determine if there is something off in your home. As psychic medium Chris Medina explains to Forbes, “Whether it’s physical or intuitive, you’ll definitely be able to know.
This, however, isn’t a deterrent to some buyers.
“I’ve had buyers who find haunted houses charming,” says Des Moines, Iowa Realtor Doug Burnett of Keller Williams Realty to the National Association of Realtors (NAR).
For Dana Bull, who works at Sagan Harborside Sotheby’s International Realty in Massachusetts, it’s a normal part of everyday life. “Salem is one of the markets where I practice real estate, and you never know what’s lurking behind closed doors,” she says.
When you are shopping for a new home, sellers do not always have to disclose that a house is haunted. Hauntings fall under the classification of “stigmatized property,” meaning that there may be additional things that a buyer could find displeasing and worthy of concern beyond the physical condition of the home.
The rules vary from state to state and even city to city, so it is especially important that you become well-versed in local real estate law so you are aware of your rights. For example, while California requires disclosure of all deaths within the last three years, New Mexico doesn’t have any laws at all.
In fact, an October 2019 study by Zillow shows that only four states address paranormal activity in their real estate disclosure laws. These states are New York, New Jersey, Massachusetts and Minnesota.
So what do you do if you find yourself living in a haunted house? You get better insurance to start.
What Are the Hazards of a Haunted House?
Ghosts are considered a material defect in an Iowa home, but the rules vary from state to state.
“A haunted house would need a higher premium since it is prone to accidents and risks such as fire, cracks and broken parts of the house,” explains Michael Hamelburger, CEO of Expense Reduction Group. “Visitors can also experience slips and falls, and even encounter carbon monoxide inhalation. The fact is, it needs to have the best comprehensive coverage for claim results.”
Paranormal investigators can attempt to clear the home of any lingering spirits, but every case is different, and every person is unique in their beliefs. There are a good number of people who do not believe in ghosts or spirits at all, and there are others who actively seek out a haunted home, even going as far as to enlist the services of the “Haunted Housebuyer,” Scott FladHammer.
However, some realtors have noted that haunted homes could present a lower resale value because some buyers are literally scared away by stigmatized properties.
[ Read: What Does Homeowners Insurance Cover? ]
Home Insurance for a Haunted House
“Strange things may happen in your house and you may explain the experiences by attributing the phenomenon to ghosts or other haunts,” says home insurance expert Melanie Musson. “It’s nearly impossible to prove that your house is, in fact, haunted using any mainstream measurements. Home insurance companies have to use proven factors in formulating insurance rates.”
You could find your homeowners insurance dropped if your home continues to experience repeated or extensive damage resulting in multiple claims.
“If you have a history of making multiple claims, your homeowner’s insurance provider may decide not to renew your coverage because they don’t want to continue to cover your heightened risk,” explains Musson. “After getting homeowners insurance canceled, it can be difficult to find another insurer. They don’t really care if your house is haunted; what they care about is that they’re losing money over and over again with you as a client.”
Hammelburger also urges homeowners to consider additional coverage. “The more unkempt the house is, the more that an umbrella policy is needed so that it can cover additional liabilities. When the limit has been reached, the umbrella policy can surely help.”
Finally, Matthew Dailly, the Managing Director for Tiger Financial, reminds us again that the use of your home can also impact your rates. “Your insurance does not necessarily increase if your house is haunted, it is more what you do with it than the house itself,” he explains.
Additional Coverage to Consider
Home insurance could cost more simply because of the interest that your home piques.
“The only reason why your haunted house would cost you more to insure than a regular house would be if your insurer thought your home would attract more interest and possible vandalism due to the heightened interest by others,” explains Andrew Roderick, CEO of Credit Repair Companies. “With the added interest of others, your home might be at risk of other unwanted visitors trying to gain access to the property when you aren’t at home.”
Other homeowners may try to profit from their spiritual roommates, explains Dailly. “If you are having a party in your haunted house, your regular home insurance should cover anything that happened at the time. But, if you are charging a fee for people to come into the haunted house, you would need seperate haunted house insurance. It would need to cover the commercial side of the property, now that you are taking a fee. The liability of your coverage could also be negated if you charge admission. This covers injuries on the property, which is something that you need if you think the place is really haunted.”
The Bottom Line
When it comes to calculating your homeowners insurance policy, insurance providers are not likely to penalize you for owning a haunted home. Insurers must use quantifiable evidence in order to assess your risk as a potential policyholder, and stigmatized properties don’t make the cut unless you have a demonstrated high history of claims.
Photo by Chuck Ortego / GettyImages