Your home has been on the market for months and you’re being pushed to sell it because you’ve already made an offer on a new one, which is conditional on you selling your old home. In other words, you find a buyer but he can’t buy it right away. Your chance of buying the new home could slip away if you decided to wait longer. Thus, you decide to go for it; you buy the new home and move into it.
Is your situation similar to one of the following?
- Your father, who was living alone, passed away a few weeks ago and neither you nor your brother lived in his home because you each already had your own dwelling. During the estate process, which will take several months, you decide to put the house up for sale because no one lives there.
- You are a proud landowner that buys several residential unit buildings for your future retirement. All your buildings bring in money except for one, the single-family dwelling located in a rather remote area that you have been unable to rent for several months and that still remains vacant.
- You’ve just gone to the notary’s office for your new dwelling that has just been built. You are proud and eager to move into it but you still need to wait a few more weeks, even a few months, before being able to do so because the sale of your old home has not been finalized. As a result, there will be a delay between the end of the construction and the move-in date.
Each of these situations will result in a change of occupancy with regard to your home insurance contract because your home will then be considered vacant. What is vacancy?
Vacant home or unoccupied home?
There is a difference between a “vacant” home and one that is “unoccupied”. A dwelling is “unoccupied” when, for example, you go on a cruise for two weeks with your spouse’s family. Even if the dwelling is not considered vacant in this case, do not forget that during the regular heating season, damage caused by freezing will not be covered after seven days of unoccupancy if an appropriate person has not gone to your home every day to check that the heating is working or if you have not turned off the water and drained all the pipes and fixtures. On the other hand, from an insurance perspective, a dwelling is considered vacant when the occupants leave it permanently. Leaving old furniture and a few belongings does not change the fact that your dwelling is vacant. In the case of a new construction, vacancy also applies to a dwelling that you have not yet moved into.
What happens next?
Once the vacancy of your dwelling has been accepted, expect your premium to change. This happens because the risk is no longer the same since the home used to be lived in, occupied, maintained and monitored. Given that the dwelling is now vacant and that it isn’t visited regularly, if something were to happen it would take some time to discover, if at all, that a loss had occurred. Some vacant homes can attract vandals. Some homeowners may even have an interest for their vacant home to turn into an insurance payout. For these reasons, the risk is bigger.
It is important to know that the acceptance of your dwelling’s vacancy by your insurer does not protect you against all types of loss. Some exclusions apply to your home insurance contract even if it is. Here is the list of main exclusions:
- Glass breakage
- Vandalism and malicious acts
- Fuel oil damage
- Any type of water damage
- Theft or attempted theft
The one thing you must remember when your dwelling becomes vacant, whatever the situation may be, is that you must always notify your insurer. Otherwise, you risk losing your entire investment. Generally, your insurer will issue a vacancy permit for a relatively short period of time. What should be done after that?
The best solution would be to contact a damage insurance broker. Your broker will have access to several specialized insurers who will be able to offer protection for your home for an extended period while it is vacant. This is something that a general insurer cannot offer!