Empty or Vacant House and Home Insurance

Elliott Insurance Services    January 30, 2020
Vacancy Permit - House Insurance

If you currently own a property that is vacant, you should be aware that your insurance policy might not cover that vacant property after a certain number of days. Every insurance company has different rules and coverages, but the majority of the insurance companies have rules that will void your coverage if the property is left vacant.

It is important to inform your insurance broker that you are planning on leaving the house vacant as soon as possible so that they can ensure you are able to keep coverage on your property. Continue reading to learn more about vacancy permits, insurance tips on vacant properties, and tips to keep your property a little safer if it is going to be left vacant.

What is Considered a Vacant Property?

The definition of a vacant home can be slightly different from different insurance companies, so always check with your broker about your own personal policy. The common thread seems to be when the home has been vacant for 30 days or when the inhabitants leave the property with no intention of returning. This can be on newly built homes, recently bought or sold properties, or even estates from the loss of a loved one.

Do keep in mind there are separate rules for homes that are vacant for a shorter period of time in regard to water coverage and responsible people checking on the home. Again, always check with your broker if you are leaving your home unoccupied for 4 or more days to ensure you are not going to run into a problem.

What is a Vacancy Permit?

A vacancy permit is an endorsement added to a home policy that will extend your home insurance to maintain coverage on the property while it is vacant. Normally a vacant property is explicitly excluded from coverage.

The vacancy permit is usually issued for a specific length of time and will reduce the coverages on the policy. A vacancy permit offers basic protection against damage caused by fire, lightning, explosion, windstorm, hail and vehicle impact but won’t provide coverage for vandalism, theft, glass damage, water escape or other perils.

The vacancy permit may increase your premiums and deductibles. The insurance company could also require you to check on the property at regular intervals to ensure that the house is still safe.

Why is a Vacant Property a Higher Risk?

When there is damage to a property that has been unnoticed, it can quickly turn into a much larger issue. For example, if you had a slow leak from your toilet that was leaking onto the bathroom floor, you would notice this quickly if you were living in the house. If no one was living in that house, then that leak would manifest into a significantly larger problem. Depending on how long you were gone, that second floor bathroom might even be on the first floor when you get back.

Even though water is usually the cause of loss with vacant properties, there are risks such as fires from electrical issues, squatters, vandalism, or even gas leaks that must be considered. If you were living in the property, you would notice a gas leak pretty quickly. When the property has been vacant and the owner comes back or comes to check on it, a gas leak could be lethal or cause a total loss on the property.

Some of these examples would still be excluded on a vacancy permit, but these examples are here to outline why the risk is greater on a vacant property.

What Happens if the Home is Vacant with no Vacancy Permit?

Without a vacancy permit, your house may be uninsured due to the exclusions on your insurance policy and any claims you try to make may be denied. Which means if your house were to burn down due to a fire while it was vacant, there would be no money from the insurance company. Keep a good line of communication open with your broker as they are there to help you with your insurance and to help make sure these types of scenarios never happen to you.

Can We Still Insure a Vacant Property?

Yes, you can still insure a vacant property and usually with your current insurance provider. First, you need to contact your broker and let them know in advance that the property is going to be vacant. Your broker will then approach your insurance company and find out exactly what that company will offer for coverages on a vacant property.

Most insurance companies will be willing to put on a short-term vacancy permit to allow you to keep some coverage on the property while it is vacant. It should be noted that in most cases there will be less coverage, cost more money, and most likely will have a higher deductible than if you insured the house with people living in it.

Will the Vacancy Permit Expire?

Yes, the vacancy permit is applied for a specified amount of time. If that time is running out, make sure you let your broker know that you may need more time for the vacancy permit. Sometimes your broker can negotiate more time on a vacancy permit if the insurance company is willing. There are limits though, so if possible, you should avoid having to extend your vacancy permit longer. If the insurance company is unwilling to extend the permit, you may be left with an uninsured property and a gap in insurance.

Safety Measures for Your Vacant Property

  • Turn off the water and drain all pipes (open faucets). You should also flush the toilets and hold down the lever to get all the water out that you can. This will reduce the risk of pipes bursting or leaking.
  • Install water sensors that will detect water and send an alert of some kind.
  • Inspect the property regularly.
  • During the heating season you could investigate putting some non-toxic antifreeze in plumbing traps. This will reduce the risk of bursting pipes if the heat fails.
  • Temperature sensors can be installed to alert the owner if the heating units fail.
  • Change the locks if this is a rental property that is currently vacant.
  • Make sure the property has the appearance that someone is living in it. Keep up on maintenance such as grass cutting, snow shoveling, or have lights inside the home on a timer.

Real-Life Examples

Some real-life examples of when a home could be vacant:

  • Purchasing a new home, but you do not plan to move into it for a month or more
  • Selling a home, but you have already moved into your new house.
  • Estates. If someone has passed away and left a property to you, there is a good chance that home will be vacant for some time while everything is arranged. Make sure your broker is aware.

The Final Word

There is a vast amount of information for you to digest above. The main theme that should have been clear throughout this article is that you should maintain communication with your broker so that they can ensure that you maintain your insurance coverage on your property. Insurance is complicated, it’s even more complicated when different insurance companies have vastly different rules. It’s critical for the broker and the insured to be aware that every company could handle things slightly different.

The first thing you should do when you are expecting your property to be vacant is to contact your broker and find out the rules for your insurance company. From there you can decide if a vacancy permit will be required and the requirements of that vacancy permit. A vacancy permit could cost a little more money and offer less coverage, but having your claim denied because you didn’t make that phone call will cost significantly more.

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