Do Vacant Business and Residential Properties Need Insurance?
Vacant properties often fly under the radar when it comes to insurance coverage. Owners can assume that if a building isn’t being used, whether it’s a house between tenants or a business space awaiting its next lease, it’s not a risk. What happens if owners let the insurance lapse on a vacant property? What insurance is needed for a vacant house or business?
Vacant properties are vulnerable to a range of issues, from vandalism to weather-related damage. Whether you own a commercial building or a residential home, insuring vacant property protects your investment.
Western Financial Group, a 100% Canadian company, can help you navigate your business, car, and home insurance during this period of economic uncertainty.
What is vacant property insurance?
Vacant property insurance, sometimes called unoccupied property insurance, is a special type of insurance policy designed to protect buildings that are temporarily not in use. Most standard home or commercial property insurance policies include a clause that voids or limits coverage if the property is left vacant for a certain period, usually 30 to 60 days.
A vacant building presents unique risks. Without someone present to monitor it, even small issues like a water leak or broken window can turn into major and costly problems.
Vacant property insurance fills this gap, offering protection tailored to unoccupied spaces.
What if owners let the insurance lapse on a vacant property?
Without an active insurance policy, fire, vandalism, or severe weather may not be covered and leave the owner financially responsible for repair or replacement costs.
If someone is injured on property or if there is damage to neighboring properties, owners could be held financially responsible without insurance to cover legal or settlement costs.
Letting insurance lapse could result in higher premiums, especially if the property has been vacant or there have been claims.
If there’s a mortgage, the lender often requires ongoing insurance. By letting insurance lapse on a home or business building could result in default or foreclosure.
Why vacant properties are high risk
Vacant buildings, whether residential or commercial, face a higher level of exposure to specific risks, including:
Vandalism and theft
A building that appears empty is a tempting target for vandals, thieves, or trespassers. With no occupants to deter criminal activity, these properties are more likely to be damaged or looted.
Fire and water damage
Small issues like an electrical fault or leaky pipe can go unnoticed for days or even weeks in a vacant property. Without regular supervision, a small incident can escalate quickly.
Squatters
Empty residential homes and commercial units can sometimes attract unauthorized occupants. Evicting squatters is not only a legal headache but can also lead to property damage and liability concerns.
Liability risks
Even if no one is living in or working at the property, the owner is still legally responsible for injuries or accidents that occur on-site. For example, if a child is injured while playing near an unsecured, vacant building, the property owner could be held liable.
Residential vacant property: Common scenarios
Residential properties can be left vacant for many reasons, including:
- The home is for sale, but hasn’t yet sold
- A rental unit is between tenants
- The owner is away for an extended period
- A property is being renovated or restored
In each of these cases, you’ll need to understand how long your home insurance provider allows the property to be vacant before the policy becomes void or limited. Most insurers require notification if the property will be unoccupied beyond a specified time frame—usually 30 days.
What insurance is needed for vacant homes?
Vacant home insurance is designed to protect properties that are not occupied for a period of time, typically exceeding 30 days.
Vacant home insurance typically maintains coverage for things like fire, theft, vandalism, and liability. Some policies may also cover specific risks during renovations, depending on the nature of the work. Check all details with your insurer when you are getting vacant home insurance.
Business or commercial property: Why it still needs protection
Business properties are vulnerable when they are vacant. These properties can contain assets like equipment, inventory, or appliances that make them attractive to criminals. They can also be attractive to pests and rodents.
Commercial properties that are awaiting lease, undergoing construction, or transitioning between business owners still carry potential legal liabilities. A vacant storefront, office, or industrial building without proper insurance could expose its owner to significant financial risk if something goes wrong.
What insurance is needed for a vacant business property? If you're a commercial property owner or business owner, vacant commercial property insurance is worth considering in the following situations:
- A lease has ended and you're searching for new tenants
- The business has relocated, but the property is not yet sold
- Renovations are underway and the building is empty
- The business has closed, but you’re keeping the property as an investment
Vacant commercial property insurance typically covers fires, vandalism, water damage if the property is maintained, and liability protection. Depending on the insurer, it may include coverage for materials or equipment still on-site. It’s important to understand what is covered and what is not covered for a vacant business property.
How much does vacant property insurance cost?
Vacant property insurance tends to be more expensive than standard property coverage because there are more risks. Premiums can depend on several factors, including:
- Location of the property
- Type and condition of the building
- Duration of vacancy
- Whether renovations are ongoing
- Security measures in place (e.g., alarms, cameras)
While it may feel like an added cost, the price of not having the right coverage, especially in the event of a major incident can far exceed the premium.
Tips for managing vacant property risks
Whether your property is empty for a few weeks or several months, here are a few ways to mitigate risks:
- Notify your insurer: Always inform your insurance provider when a property will be vacant for more than their allowed period of time.
- Secure the property: Install deadbolts, motion-activated lighting, and security cameras. Board up windows if necessary.
- Maintain basic services: Keep the heat on low in winter and ensure electricity remains on for alarm systems or lights.
- Schedule regular checks: Arrange for someone to inspect the property regularly and document their visits.
- Consider temporary occupancy: If practical, renting to short-term tenants or even house-sitters can reduce risk and cost.
Final thoughts: Is insurance for vacant property worth it?
Vacant property insurance, whether residential or commercial, protects you financially. Without it, you could be left with the bill for damages or liability claims. Vacant property insurance fills the gaps during transitions, renovations, or extended absences.
Protect your property, even when it's unoccupied. It's not just good risk management, it’s smart insurance planning.
5 FAQs about vacant property and insurance
Does vacant land need to be insured in Canada?
Even if you do not use your home or parcel of land, they should be insured against property damage and liability especially after 30 days.
Is a vacant house expensive to insure?
It is ore expensive to insure a vacant home because of the increased risks associated with what could go wrong without anyone being aware.
What does vacant mean in insurance terms?
In insurance terms, a vacant home is a property that is not occupied and is generally considered empty, meaning most personal belongings have been removed.
What’s the difference between vacant and unoccupied?
A vacant home is one that has no furniture and is unattended for more than 30 days. An unoccupied home is one that is temporarily uninhabited and has its belongings.
What counts as unoccupied?
A property will have to be left empty for a specific period of time before it is legally classed as unoccupied. It’s usually 30, 45 or 60 days or more.
