Vacant properties—whether it’s a rental home waiting for new tenants, your own house undergoing renovations, or an extended absence making the property unoccupied—pose unique risks. These properties are more vulnerable to vandalism, theft, and unexpected damage. For landlords and homeowners, understanding how your insurance coverage may change during these times is essential. This guide provides practical tips for protecting your vacant or unoccupied property and ensuring your insurance needs are met.
Notify Your Insurance Company Immediately
If your property becomes vacant or unoccupied, notify your insurance company immediately. Standard home and landlord insurance policies often have limitations or exclusions for these situations. Failing to inform your insurer could result in denied claims, leaving you financially exposed.
Vacant vs. Unoccupied Properties
Understanding the distinction between vacant and unoccupied properties is crucial for proper insurance coverage:
- Vacant: A property with no residents.
- Unoccupied: A property temporarily without residents but with personal belongings and an intention to return soon.
Common Scenarios for Vacancy or Unoccupancy
Here are some common situations where properties may require special coverage or consideration:
- Newly Purchased Property: If the home is empty while you wait to move in, rent, or start renovations, it’s considered vacant.
- Property Sold: A property sitting empty while awaiting the new buyer’s possession is vacant.
- Tenant Turnover: A rental property is vacant as soon as tenants leave, even if you’re actively seeking new renters.
- Renovations and Delays: Properties under renovation or awaiting permits are classified as vacant until they are occupied.
- Extended Absences: Homeowners leaving for extended trips or health reasons may make the property unoccupied. Check your policy requirements for maintaining coverage.
- Estate Properties: Homes left empty after the homeowner’s death require special coverage as they are considered vacant.
- Work Relocation: Leaving your primary residence to work elsewhere often classifies the home as vacant.
- Other Scenarios: Life brings many unique situations. Always consult a licensed insurance broker to understand how your circumstances affect coverage.
Note: Properties under renovation or construction may require specialized “under renovation” or “builder’s risk” insurance policies.
Misconceptions About Vacant Property Insurance
Many landlords and homeowners believe they can avoid vacant property insurance by taking certain actions. However, insurers often don’t recognize these measures as valid. Here are some common misconceptions:
- “I Check on the Property Regularly.”
While regular visits are a good practice, they don’t change the property’s classification as vacant. Claims may still be denied under a vacancy exclusion. - “I’m Moving My Stuff In and Sleeping There Occasionally.”
Sporadic visits or partial use of the property do not satisfy occupancy requirements. The vacancy exclusion still applies. - “I’m Actively Seeking Tenants.”
A property being shown to prospective tenants remains vacant until it is leased and occupied.
Lessons from Court Cases
Court rulings highlight how critical it is to address vacancy with your insurer. Consider these examples:
- Wu. V. Gore Mutual Insurance Company: A rental property owner’s insurance claim was denied after a fire destroyed the home because it was considered vacant. The property had been empty for over 30 days since the last tenant moved out, even though the owner regularly visited to clean. The insurance policy had an exclusion for properties vacant for more than 30 days, so the insurer was allowed to deny the claim based on this clause. The key point: Insurance won’t cover damages if the property is empty too long, even with regular visits.
- Taylor v. Co-operators General Insurance Company In this case, the Plaintiff filed a claim with Co-operators General Insurance Company after a fire caused $80,000 in damage to his rental property in Westlock, Alberta. The insurer denied the claim, arguing that the house had been vacant for more than 30 consecutive days, which excluded coverage under the policy. The court determined that “vacant” meant no resident had moved in, and despite Taylor occasionally using the property for renovations, he had not established residency. The court also rejected Taylor’s argument that a parked trailer near the house made the property occupied. Ultimately, the insurer was not obligated to cover the loss due to the clear definition of vacancy in the policy.
Vacant Property Insurance: What to Expect
Vacant property insurance differs significantly from standard home or landlord insurance policies. Coverage is often limited to specific risks, such as fire, windstorm, or hail, and typically excludes the following:
- Water Damage: Rarely covered under vacant property policies.
- Vandalism and Malicious Acts: Often excluded.
- Glass Breakage: Typically not included.
- Theft: Usually excluded.
- Among others – speak to a Licensed Insurance Broker about your property specifically
Policies may also settle claims on an Actual Cash Value (ACV) basis, which factors in depreciation. To maximize coverage, keep records of updates and improvements to the property.
Amending Policies for Short-Term Vacancy
In some cases, existing policies can be amended to cover vacancy for a limited time, such as 30, 60, or 90 days. However, even with an amendment, certain exclusions often apply, such as:
- Water damage
- Vandalism and malicious acts
- Glass breakage
- Theft
Most insurers will not cover properties vacant for more than one year, even with a vacant home insurance policy. But its important to get vacant home insurance quotes from multiple providers to find options.
Going Away and Your Personal Home Insurance When the Property Becomes Unoccupied
Home insurance policies usually contain certain requirements while you go away temporarily after a certain number of days. This makes the property unoccupied as opposed to vacant. Each company is different so its important to check specifically with your insurance company and how going away temporarily impacts the policy. Typically there are certain actions which need to be taken while the property is temporarily unoccupied to maintain coverage. Some coverages can still be suspended while you area away.
Key Steps to Take When Your Property Is Vacant
- Keep the Heat On: Maintain a minimum temperature to prevent pipes from freezing and bursting, as this can cause significant water damage that is often not covered under vacant home policies. Keeping the heat on also helps reduce issues like mold and structural damage due to cold temperatures.
- Turn Off the Water Supply: Shutting off the main water valve and draining the pipes can prevent leaks or burst pipes, which are common causes of damage in vacant properties. Remember, most vacant home insurance policies do not cover water damage, so this step is crucial for minimizing risk.
- Install Security Measures: Set up security cameras, alarm systems, or regular inspections to deter vandalism and unauthorized entry, which are common risks for vacant properties. Insurance claims related to vandalism can be denied if proper security precautions aren’t in place.
- Regular Property Checks: Arrange for someone to regularly check on the property, ensuring that any minor issues, such as leaks or damage from weather, are addressed promptly. Depending on the policy, it may be a requirement that a competent person check the property at regular intervals defined by the policy to keep the policy valid.
- Maintain Outdoor Areas: Keep up with outdoor maintenance, such as mowing the lawn, removing snow, and trimming trees or shrubs, to ensure the property doesn’t appear neglected or abandoned. This not only helps deter potential vandals but also prevents hazards like fallen branches, which could lead to damage not typically covered under vacant home policies.
Key Takeaways
- Always inform your insurer when a property will become vacant or becomes vacant, regardless of how long you expect it to remain unoccupied or vacant.
- Vacant property insurance policies are specifically designed to address the increased risks associated with empty homes although many still have important events that are not covered such as no water damage coverage.
- Courts frequently side with insurers in disputes where properties were vacant without proper coverage, making it crucial to address insurance needs proactively.
- Even if you leave your property for a short time, there are steps you typically need to take to maintain coverage.
- Merely visiting the property or making occasional use of it does not change its status as vacant in the eyes of insurers, and coverage exclusions will still apply.
For more information or to discuss your unique situation, you must always speak with a licensed insurance broker or insurance professional who can guide you on the best coverage options available for vacant properties.