Wednesday, March 10, 2010

Insuring a Vacant Property - Mom's away

Guest Author William Chan B.A., CIP, CRM

As the Canadian population continue to age and ease themselves into the next phase of their adult life, an issue has come to the forefront that is worthy of some consideration. This would be the issue of managing the properties left behind by elderly parents who have passed on or have moved into a retirement community.

From an insurance perspective, what you should know is that “vacant” properties make insurance company very nervous. They are usually not at all comfortable with insuring vacant locations and it is the job of your insurance professional to convince them otherwise.

Once a properly is no longer occupied, the first thing you should do is to notify your insurance professional. They would then obtain a vacancy permit – basically an amendment to the insurance policy to allow for vacancy of he premises - from the insurance company. The vacancy permit will be effective for only a fix period of time, usually between three to six months and is usually renewable.

The vacancy permit does come with it a number of conditions which must be fulfilled in order for coverage to remain in effect. It would be prudent to find out what these are from your broker and ensure these requirements are met to avoid denial of coverage in case of loss. These conditions may include a 48 or 72 hour warranty, requiring the premise to be checked at least once every two or three days by a competent person, or a temperature warranty, requiring that heat be maintained so as to prevent water pipe burst. Different insurance company may have different requirements, so it is best to find out exactly what is required.

You may also consider house sitting as an option. Perhaps a close friend, relative or even you would appreciate having a little place for them, even if it is for a little while. As long as the home is occupied by someone who has a pre-existing relationship with the homeowner, the insurance company in all likelihood would accept the home as fully occupied, thus eliminating the need for a vacancy permit altogether.

The bottom-line is that if you do not disclose that a property has become vacant, you open yourself up to the possibility of being denied coverage. Be smart, talk to your insurance professional, get their advice and proceed with the best option.

Will Chan, B.A., CIP, CRM is the Branch Manager (Mississauga) of Pacific Insurance Broker Inc., and may be contacted at (P) 905-565-5565 (C) 416-844-7660

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