If you're a homeowner, you likely already have homeowners insurance. If you have a mortgage, then your lender would have required you to purchase homeowners insurance before approving your mortgage. Even if you own your home outright, then it's wise to have homeowners insurance.
However, if you own a building that you live in occasionally or lease, and it's empty for a prolonged period, your traditional homeowner's insurance policy likely will not continue to protect the building, and you'll need the added safety net of vacant property insurance. Ontario homeowners need to know that, depending on the insurer and the stipulations in their home insurance policy, it's likely that a vacant building will not be insured if it has been vacant for long enough. That's where vacant property insurance comes in.
Essentially, if you own a property that is vacant for a set period of time—usually around 30 days—then you need vacant property insurance. Usually, most homeowners insurance policies do not extend to empty buildings. A homeowners insurance policy is meant to protect a home being lived in. Someone is there to cut the grass, shovel snow, pick up the mail, and maintain the building. Meanwhile, many more risks are associated with owning a vacant property because no one is usually around to check on the home and complete routine maintenance for an extended period.
While the amount of time a building remains empty until it's considered vacant depends on the insurance company, if you own an empty building or know that your property will be vacant soon, you must immediately inform your insurance agent. Otherwise, you risk not having any insurance coverage. You will be personally liable for any financial damages if an accident occurs.
When it comes to vacant property insurance, Ontario properties only need it in specific situations where a home or rental property will be empty for an extended period. If you're a property owner and lease rental properties and know the building will be empty, you must immediately inform your insurance provider.
There are several reasons why you may need vacant property insurance. Ontario property owners often have no intention of leaving a house vacant when they first purchase it. Still, circumstances change, and sometimes a property must be unoccupied for some time. Situations that require vacant property insurance include:
Most vacant property insurance policies are required if your house is empty for 30 days or more. This is often referred to as the 30-day rule. If your property is unoccupied for over 30 days, your insurer can void your home insurance policy and deny any claims. It's essential to inform your insurer about your absence before that 30-day period begins to avoid being stuck in this situation.
For example, let your insurance company know if you're not staying at your vacation property during the winter. Then, the insurance broker will be able to let you know what your options are. Some insurers may consider the property vacant, while others might think it unoccupied, depending on factors such as how long you're away, the property's location and other considerations.
In the insurance world, "unoccupied" and "vacant" are different situations. However, it's essential to know that different home insurance companies will have different guidelines regarding when a home is considered vacant and when it is considered unoccupied. A licensed broker at Morison Insurance can help you find an insurer who is suitable for your unique needs.
Typically, an unoccupied home is a property that can be lived in at any time and is one you intend to occupy soon. Some vacation properties, like cottages, fall under this category. The cottage will be considered unoccupied during the off-season. A typical cottage insurance policy already takes these unoccupied periods into account. It's important to check with your insurer to confirm that your policy enables unoccupied homes to be empty for more than 30 days. You should also ask someone to check on your unoccupied properties while you're away—perhaps a neighbour or friend who stays at their cabin year-round.
Contrarily, a vacant property is a home you don't intend to live in for a set period. For instance, the utilities are not being paid for; it has no furniture within the space and is all-around considered unlivable. In that case, the most appropriate option is vacant property insurance. Ontario investment properties that are waiting to be rented or sold fall under this category.
It's important to note that not all insurance providers offer coverage for vacant homes since there are more risks associated with owning vacant houses and, therefore, more risks inherent in providing vacant property insurance. Ontario insurance companies sometimes offer a particular insurance policy or vacancy permit designed to protect the property in your absence. Whether or not your insurer offers this dispensation often depends on the reason why the property is empty.
Vacant property insurance coverage varies per provider, so it's best to ask your Morison Insurance broker to review your policy's specifications with you. However, vacant house insurance may include some of the following types of coverage:
Also, there will be additional coverages that you can usually purchase as an add-on endorsement to vacant property insurance plans. A couple of these add-ons may include:
Ontario, vacant property insurance can be purchased two ways: either as a separate policy or as an add-on endorsement to your existing homeowner's policy. Before purchasing vacant property insurance, you should establish whether you need a separate policy or if an endorsement is sufficient. For instance, an endorsement may be helpful to cover your property for temporary vacancies—such as a rental home that is soon to be unoccupied because a tenant gave their notice. If you think it may take a while to find a new tenant, then an endorsement should be able to cover you while the property is empty. Meanwhile, if you know the property will be empty for a significant amount of time—say you're going travelling for a year—then a standalone policy might be a better fit.
The next step is to speak to a Morison Insurance broker. One of our dedicated brokers will help you find a policy that is suited to your unique needs. They will shop around on your behalf to find a competitive rate that offers comprehensive coverage.
If you've got a parcel of land that doesn't have any actual structures built on it, that's a different matter—insurance coverage is still recommended. Still, you would need vacant land insurance rather than vacant property insurance. Ontario property owners don't always consider insuring vacant land. Still, it's essential to have liability coverage if something happens on the land to cause bodily injury or property damage that you could be liable for.
That's true for any vacant land, but particularly for packages of land that are attractive to trespassers, whether they know they're trespassing or not. For example, if your land is situated in such a way that it makes a convenient shortcut between two points or if it features natural beauty that attracts people who want to check out the views. If someone was injured on your land—a hiker who stumbles and falls down a steep embankment, for example—you could have legal action brought against you and be liable to pay settlement costs. If you have vacant land insurance with liability coverage, your insurance company will provide funds to cover your legal costs up to the limits on your policy.
The average cost of vacant property insurance varies depending on the insurance provider. Several factors also influence how much your individual vacant property insurance policy will cost. Some of these factors include:
Ontario brokers at Morison Insurance will ask many questions when applying for vacant property insurance to get more information about your property and your unique risk exposures. Some of these questions may include:
While vacant property insurance is essential to provide financial remuneration in the event of an accident or natural disaster, it's also important to do what you can to mitigate the risk of something happening at your empty property. Ensure you are investing in routine maintenance while the building is empty.
One of the best steps you can take is to have someone like a neighbour or a friend nearby check on the property occasionally. You can also pay professionals to do this. Having someone physically at the property now and then to keep the exterior tidy and remove any trash or other indications that may make it seem abandoned goes a long way toward deterring squatters and vandals.
Consider installing a security system and ensuring the property is always locked. Your security system should alert you to intruders and severe problems such as fire or flooding. It would help if you were mindful of the amenities, such as heating and plumbing. Consider turning amenities off while no one is at the property.
If your property is currently under construction or renovation, installing a fence around it is a good idea to help deter casual trespassers. And, of course, let your insurance broker know when you think the property will be vacant so you can jump on your vacant property insurance policy.
If you're interested in acquiring a policy for vacant property insurance, Ontario brokers at Morison Insurance are available to consult with you and get started on a quote. Any member of our highly skilled team will be able to help you find vacant property insurance coverage that is ideal for your needs. To get started, fill out the online form below or give us a call at 1-800-463-8074.
This content is written by our Morison Insurance team. It is provided for general information only. Insurance needs differ from person to person, and this article is therefore not a substitute for professional advice about your individual insurance needs which can be obtained by speaking to one of our brokers.