What is the impact of a vacant house on your insurance?

A house can be left unoccupied for a variety of reasons. You might be snowboarding and spending the winter months in a cozy tropical cabin, or perhaps your property is undergoing renovations and you're temporarily living in a hotel. There's a difference between unoccupied and vacant. Vacant means the house isn't being lived in at all, but there may still be personal belongings, appliances, and so on in the property. If you're away for a few days, weeks, or even months, but intend to return, it won't be considered vacant. However, in the case of a deceased homeowner, the house might be considered vacant because it's ready to be occupied and perhaps even fully furnished, but no one is currently living there.

Ultimately, by definition, vacancy is more related to the intention to return than to the actual occupancy. The question is, how does vacancy affect home insurance? Read on to find out.

How insurance companies perceive vacant properties:

Because there is no one to look after or maintain the property, insurance companies generally consider an unoccupied property to be a higher risk. Without someone present to catch problems early before they worsen, the risk of damage increases exponentially. This applies to things like burst pipes, which can slowly leak over time and gradually worsen until significant damage has been done to the property, potentially costing thousands of dollars in repairs. Furthermore, homes with visual indications of being vacant—i.e., unfenced lawns, overflowing mailboxes, no lights on—can be more attractive to thieves and burglars and are more at risk of break-ins.

Will insurance companies still insure vacant homes? It depends. Many insurance policies contain a clause that sets a limit on how long a property can be considered vacant before the policy is canceled. This is usually around 30 days, but be sure to familiarize yourself with the fine print of your policy to be certain. Standard home insurance may not always include vacant homes. In some cases where a vacant home can be insured, coverage is likely limited. Most companies will not cover vacant homes for damages such as water damage, vandalism/theft, and broken glass.

Vacant house versus unoccupied house

An unoccupied home is essentially classified as a home where the residents are temporarily absent, whether for travel, pest infestation, or other reasons. Unoccupied homes can be left empty for up to 30 days without requiring additional insurance. With unoccupied homes, the intention is to return within a certain timeframe. If your trip might last longer than 30 days, consider having someone register your property for you, but be sure to inform your broker, as you may still need additional insurance.

A vacant home is a house or property left empty with no intention of returning to it, because it is meant to be rented, is waiting to be sold, or the owner who lived there has died. It may be fully furnished or empty. Whether utilities are cut off or not, the risk of damage to vacant homes is still much higher. Vacant homes may require additional vacant home insurance, which is usually more expensive than your standard home insurance and may have limited coverage. However, it is better to have this policy than not, as a vacant home will not be covered if something happens to it without first obtaining an extension.

Is it expensive to insure a vacant house?

It is generally 50 to 60 percent more expensive to insure a vacant home, and the cost will depend on a multitude of factors. You can expect your typical current factors to play a role—i.e., geographic location, square footage, age of the home, age of the systems, insurance history, etc.—in addition to factors specific to vacancy, such as the reason for the vacancy, how often someone checks on the property, and the total duration of the vacancy. With some insurance companies, the additional premium may be waived for the first 30 days the home is left unoccupied, but coverage restrictions may apply immediately. You should inform your broker of the vacancy as soon as possible.

What to do if your house is empty:

Once you know your property will be left empty for any reason, contact your home insurance broker. They will want several pieces of information, including:

• What security measures does your property have in place?
• If the water is already cut off
• If someone shows up at your door
• End date of the vacation period
• When the holiday period began
• If the heat is maintained
• …etc.

To help minimize your insurance premiums, you can hire a property manager to look after your vacant home. This could be a house sitter or simply a family member who will do things to keep your property well-maintained, including sweeping up debris, mowing the lawn, checking for signs of damage, emptying the mail, and so on. This also helps give the impression that the house is occupied, making it less attractive to potential thieves.

Where possible, a friend, family member, or tenant can temporarily move into the property to avoid vacant status altogether.