Heading down south for the winter? Well, you may need more insurance coverage. As baby boomers continue to reach retirement, owning a second home or vacation property continues to be a growing trend. More and more Canadians are stamping their snowbird passports and spending the Canadian winter months in the sand and sun. But is your homeowners’ insurance policy enough? Any dwelling that is vacant for an extended period is at increased risk of loss and the onus is on you to determine what your policy covers. That’s where Vacant Property Insurance comes in. Let’s examine what your homeowner policy covers and when vacant home insurance can come in handy.
Homeowner policy and the ‘30-day rule’
In Ontario and throughout Canada, the 30-day home insurance rule refers to when a home is left unattended for a period longer than 30 days. When this happens, your home may be considered vacant, and your existing home insurance might be voided.
Essentially, if you own a property that is vacant, you’ll need vacant property insurance. This type of coverage provides protection for when your property is empty for a lengthy period of time. Usually, most homeowners’ insurance policies do not extend to empty buildings. A homeowners’ insurance policy is meant to protect a home that’s being lived in. There are several more risks associated with owning a vacant property. If no one is around to check on the home and complete routine maintenance, any number of issues may arise. That’s where vacant property insurance comes in.
What is the difference between an ‘unoccupied’ and ‘vacant’ home?
An unoccupied house (or uninhabited home) is a home that you as the owner intend to return to. It is fit to live in currently – meaning the utilities and appliances inside are functioning. Your home can also classify as ‘unoccupied’ if you’re on vacation.
A vacant home or property is one that you as the owner have no intention to return to or live in for a set period of time. Most, or all, furniture inside the house will have been removed. With a vacant home, utilities are shut off, possibly due to the property being on the market or rented. Often, investment properties that are waiting to be rented or sold fall under this category.
Have an investment property? You need to declare it. Read more about Ontario’s Vacant Home Tax here.
What is vacant home (property) insurance, and what’s considered a vacant home?
Vacant home insurance typically comes at an additional cost and may include limitations to your coverage. Keep in mind that depending on how long your property remains vacant and/or your insurer’s guidelines, your property may even become ineligible for insurance. Your insurer may consider a “vacant home” as either:
- A property that is no longer lived in
- Was never intended to be lived in while under your ownership
- One that won’t be occupied for an extended period
What coverage do I have with vacant house insurance?
Vacant home insurance may include some of the following types of coverage (though they may vary for each insurance provider):
- Weather damage: Extreme weather events, like windstorm or hail, can wreak serious havoc on your vacant home. Usually, a vacant property insurance policy will cover property damage from certain weather events up to the coverage limit.
- Explosion and fire coverage: Financial coverage to repair or replace any damages in a fire or explosion.
- Vandalism coverage: Helps provide financial compensation for any repairs or replacements you need to make, such as broken glass, graffiti, etc.
- Malicious mischief coverage: Not always covered under vandalism. Examples include defacing property or stealing garden equipment.
- Protection from squatters: Squatters will take up residence in your property without your knowledge, leading to property damage or theft. You will have coverage in this instance.
Look into what your 30-day home insurance clause entails and make sure you’re covered for the issues you can anticipate. Note that a vacant home insurance plan might require an endorsement or a separate policy.
Situations that require vacant property insurance
There are a number of reasons why you may need vacant home insurance. Here are some of the most common:
- Selling a home / moving to a new property: If the sale takes longer than anticipated, then the home will be considered vacant.
- Owning a seasonal rental property: If you lease a cabin only during the warmer seasons, then it’s considered vacant during the colder months.
- Performing renovations or repairs: If your property is uninhabitable during this time, then it will be considered vacant for the duration you are not living in the home.
- Owning a vacation home that you use part-time: If you have a second property that you only stay in for a few weeks or months of the year, then it may be considered vacant during the time it is unoccupied.
- Extended travel: If you travel for work or are planning an extended trip, then you may need vacant property insurance.
Issues that can arise while the home is empty
- Home fire caused by faulty wiring.
- Basement flooding may occur due a burst pipe. A small leak will not be detected while the home is empty.
- Someone can slip and fall on your walkway if the snow and ice haven’t been cleared for a long time, which will be a legal liability and possible claim.
You’ll need to let your provider or you isure broker know, so you can get all-around coverage until the home is no longer vacant.
Cottage insurance applies to units designed for seasonal vacancy. Check out how to get the best cottage policy for your getaway home here.
Unoccupied rental units
If you have an investment property that is unrented and are unable to find a tenant in 30 days, you’ll need to apply for a vacancy permit from your home insurance company. When a home is not being lived in, there are certain risks associated with it since it may not be actively visited or maintained. That’s why vacant homes are typically treated differently than more common homeowners’ insurance packages.
Measures you can take to protect your vacant home
The best way to protect your vacant home is to make it appear as though it is lived in. Here are a few tips to help protect your unoccupied house/unit:
- Be sure that all windows and doors have locks installed.
- Purchase timers for lights in your home. Take care to set timers to correlate with common daily activities (like eating dinner, bedtime).
- Make sure window coverings are being used to keep away unwanted, prying eyes.
- Installing doorway cameras or outdoor lighting to dissuade trespassers.
- Have a friend or family member keep up with outdoor maintenance i.e. lawn cutting and snow removal.
- Have a family member check up on appliances regularly.
How to purchase vacant property insurance in Ontario
Speak with your isure broker about vacant home insurance options. It can be purchased two ways:
- A separate policy: If you know the property will be empty for a significant amount of time—say you’re travelling for a year—then a standalone policy might be a better fit.
- An add-on endorsement to your existing homeowners’ policy: Best for covering your property for temporary vacancies. An example is a rental unit that is soon to be unoccupied, and may take a while to find a new tenant.
Your isure broker can help you establish whether you need a separate policy or if an endorsement is sufficient.
What is the cost of vacant home insurance?
The cost of this type of insurance will vary between insurers. Not to mention, there are several factors that can influence how much coverage will cost:
- Property type
- Amenities on the property, such as pools, ponds and trampolines
- Property size
- If the property borders a neighbour
- Vacancy reason
- The amount of coverage
- Coverage limits
- Coverage terms
- Premiums and deductibles
- Unoccupied vs. vacant
- Whether amenities are hooked up, like hydro and heating
If your home is going to be empty for more than 30 days, you may need to get vacant home insurance. Standard home insurance doesn’t include vacant home insurance. Regular policies cover a home with the assumption that someone is either living there or is checking on or maintaining the home on a regular basis. That’s why your policy can be voided for certain incidents, like water damage caused by a burst pipe. As a homeowner, you can’t leave your home unattended for more than the number of days specified in your policy—which is sometimes as little as four days—otherwise you may lose your coverage. Read your policy’s fine print to see how often your home should be checked to maintain coverage. Talk to one of our isure representatives to understand your insurer’s vacancy conditions and to see if you need to purchase vacant home insurance.