Even if you do not use your home or your lot of land, they should be insured against property damage and liability.
You never know when an accident could happen where you could face a liability claim for third-party bodily injury, or your property could be damaged.
What is the difference between vacant and unoccupied?
In insurance terms, a vacant property is not the same as an unoccupied one.
A vacant home means that the owner has no intention of returning and most, if not all, of the furnishings have been removed.
An unoccupied home means that the owner does intend to return, and the home is suitable for immediate occupancy.
How does an empty home affect your insurance?
In Canada, if a home is left empty and is unattended for longer than 30 days, it may be considered unoccupied. This may void your home insurance policy.
If you will be away from your home for longer than 30 days, you need to let your insurer know so they can help you obtain the correct insurance. You can also have someone check on the property every week to keep your home insurance active.
Cottages are an example of vacant properties and are often vacant during the off season. A vacant home insurance plan may need to be added via a separate policy or sometimes through an endorsement on your home insurance.
Vacant land insurance
If your vacant land does not have buildings or structures on it, you can insure it with vacant land insurance. This type of coverage includes liability insurance, which will help cover legal costs if there is an accident on your land and someone files a claim against you.
Also, consider what your land is used for – you may want insurance specifically for hunting, for example. If your land has a building on it, vacant lot insurance will not cover the building and you will need to insure the building separately.
Vacant property insurance
Because of the extra risk, vacant property insurance is generally one and a half to three times more expensive than standard property insurance. Scenarios that present smaller risks in occupied homes can cause a much larger problem for a vacant property. For example:
Someone could drown in an unattended pool.
Someone could slip and fall on a walkway that was not cleared of ice.
Faulty wiring could cause a fire.
A burst pipe could cause extensive water damage and mold.
Insurers consider how often a property is occupied, whether it is rented, and how frequently it is used. According to the Insurance Bureau of Canada (IBC), “Ideally, your recreational property can be listed on your home insurance as a secondary or seasonal location. You can also have property insurance as a separate, stand-alone policy.”
“Risks like water damage and vandalism may not be covered because the damage is more likely to be severe. Due to the risks associated with part-time occupation, recreational property insurance is generally provided on a named perils policy instead of a comprehensive or all risks policy,” explains IBC.
You may think that the building on your vacant property is not worth insuring, but IBC advises that “even a ‘fixer-upper’ of low value still requires third-party liability coverage. This protects you if someone is hurt on your property or if you start a fire that accidentally spreads to neighboring properties.”
Managing vacant property risks
In addition to insuring your vacant property or land, you can minimize the risks associated with it.
Install security systems that alert you to floods, fire, or intruders.
Have a fence installed around the property during renovations or construction.
Seal doors and windows and remove valuables.
Visit the property regularly to check for damage or threats of damage