What is the Difference Between Vacant & Unoccupied?

June 21, 2023

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In April, 2023, 2,100 homes were reported vacant in Toronto. While the terms vacant and unoccupied may seem like the same thing from an initial glance, they’re entirely different concepts in the eyes of the insurance industry. The insurance industry tends to be extremely particular about the “wording” of various coverages, conditions, and terms. As such, it’s always important to familiarize yourself with the exact wording of your policy, to ensure you’re aware of what your coverage offers and what is entailed.

In this article, we go over the differences between vacant and unoccupied homes, and how either condition could affect your home insurance coverage.

Note that every insurance company is different and has unique regulations surrounding the definitions of vacant and unoccupied. For the sake of brevity we are going to assume that a property is deemed vacant if it is not occupied with people or property after 30-60 days. Some insurance companies allow more time, some less, but you will need to ask your provider personally to see what time you might be allotted. Alternatively, give Excalibur a call if you have further questions.

Let’s get into it.

The difference between vacant and unoccupied

See, property insurance defines vacancy and unoccupancy differently because policies may exclude coverage for homes that are deemed vacant, but not necessarily homes that are deemed unoccupied. As such, you can imagine that it’s very important to determine whether a home is vacant or merely unoccupied if a claim occurs. With vacant homes, there is a larger risk of undiscovered damage, potential vandalism, and, of course, theft. The higher the risk of damages, the higher the risk of a claim. Vacant homes may also be subject to a vacant home tax.

Typically, case law would consider any home deemed vacant as entirely empty, i.e., void of both people and of personal property. Vacancy may essentially be defined as being “in the absence of the personal property necessary to support regular occupancy.” Additionally the concept of a person leaving the home with no intention of returning would be considered vacant. Unoccupied, on the other hand, implies that the property has been left in such a state that the property will still contain all the possessions and items as if the owner could return at any point and resume normal living.

As you might imagine, the difference is why a homeowners insurance provider might look upon vacancy as being higher risk than unoccupancy. Many homeowners policies, unless an endorsement is added, exclude coverage for vandalism, water damage, theft/attempted theft, glass breakage, etc., if those issues occurred during a period of vacancy. Some standard coverage may remain intact, such as coverage for perils like wind and fire damage.

In order for a home to be deemed as unoccupied and not vacant, enough items must be left behind to support an individual’s everyday living. This means furniture, functioning appliances, and cooking utensils. Normal coverage may remain in place for an unoccupied home.

Insuring a home that is vacant or unoccupied

It’s never a good thing to suffer a loss and then later discover you did not qualify for coverage or, even worse, that your insurer won’t renew your property insurance as a result of your failure to disclose your home’s vacancy. – And, yes, vacancy can be cause for voiding a policy!

If you can anticipate a period where your home may be left unoccupied or vacant for an extended period, it is always a wise decision to first consult with your insurance broker. This is also true if you are planning to undergo any home renovations. Always inform your broker about home renovations and any consequential vacancy. For the most part, insurers will allow policyholders to acquire a special endorsement or permit to insure a home unoccupied for 30-60 days consecutively so long as they are given fair warning in advance.

Vacant home insurance coverage is a bit more expensive than unoccupied home insurance coverage. If you regularly travel between your primary property and a secondary one, you may be eligible to purchase a package which would cover both properties in the periods where you are living there and leave the property unoccupied.

All in all, a vacant home is much more difficult and more expensive to insure than an unoccupied one, since it typically requires an endorsement or even separate policy entirely to be covered – depending on the insurance company. Also, not every insurer offers coverage for vacant homes.

Commercial property vacancy vs unoccupancy

Commercial property insurance with regards to differentiating between vacant and unoccupied gets a little trickier than your standard residential property insurance. With commercial properties, a building is deemed vacant unless at least 31% of its total space is occupied and there are business activities being conducted in line with the building’s typical usage. If a business property is left vacant for longer than 60 days, standard business insurance policies will remove coverage for water damage, theft or attempted theft, vandalism, water damage, etc.

Payment is also reduced for vacant properties’ covered losses. For example, if you experienced a bit of hail or wind damage during a period where your commercial business was vacant, payment would be reduced by around 15% – and would still be subject to its respective deductible.

Concluding thoughts

All in all, it’s important as a property owner to be aware of whether your property is considered vacant or unoccupied, and to keep your insurance provider and broker in on the loop. Homes being renovated may also be considered unoccupied but not vacant, where homes that are being fully re-constructed and not live-able during construction/renovation may be considered vacant.

Finally, if you own a property that is expected to be left vacant for longer than 30 or 60 days, you will need to obtain a vacancy permit through your insurer – if your insurer offers these. This is common when a home is for sale or if you have recently purchased a new home but the homeowner is still in the process of moving in. The same applies for commercial builds. Vacancy permits will suspend certain coverage exclusions and maintain coverage for a certain period of time, plus they will negate the 15% payout reduction for most perils.

Insurance language can be confusing, and we fully understand if you still have questions. We’re here to put your mind at ease. Give us a call or request a free property insurance quote today to start the process of getting the best rates for great coverage.