What is the difference between vacant property and vacancy permit?

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Don’t mention there are many people confused about the vacant property and vacancy permit, even a lot of brokers don’t know what the difference is between them. So please read below information carefully:

For existing insured location (not newly added location),   once the property becomes vacant (including sold and waiting for closing, or listed for renting out, etc), the following perils would be removed:

·         #Water damage

·         #Vandalism & Malicious Act  (only RSA Comprehensive form does not exclude vandalism)

·         #Glass

That means from the first day of vacancy, all the above coverage will be removed even with vacancy permit.    After 30 consecutive days, if the insured (the client) doesn’t (or don’t know to) apply for vacancy permit, all other coverage will be excluded.

So, all of property owners or leasees should know this things, or your insurance company or insurance brokers should remind you about this and advise you to shut off all water valves if possible, and visit the premises frequently to reduce the risk (usually insurance company will ask you to visit your premises at lease once within 72 hours).

We recently had a claim being denied.   The insured sold property and closing date would be 2 weeks after.  The client moved out just for 3 days and water pipe burst and damaged the entire 2nd and ground floor.  Vacancy permit is not required for 2 weeks vacancy  but water damage is excluded.   It is a regular market policy.

If you bought an investment property and want to add it into your policy, but you are looking for a tenant (your investment property no occupants). That means your property is a vacant property, and we insurance brokers  have no binding authority and we have to refer to the market to get vacancy permit. Even it is granted , water damage, vandalism, malicious act and glass are excluded from the day one since the risk binding. For substandard market, they will insure it as a vacant property until tenant moves in.

Some companies such as Excess can issue a rented property policy applying vacancy permit for the first 30 days without additional charge, but only fire&EC coverage. Make sure you have to inform the company there is no tenant yet, otherwise they don’t apply the vacancy permit. After one month, if it is still vacant, you have to inform the company and change your policy to a vacant property policy (even it is very costly, but please do not hide the information to save your money, it will be misrepresentative if any risks occur and be denied to claim). The insurance company will not follow up your situation, you have responsibility to report and disclose the real occupancy. Don’t find any excess like “you don’t know or you forgot and so on”. The property is yours, you have to be care of it. You have to take any results if you don’t take care of it.

If you want to get water damage coverage for vacant property, there is only a couple of substandard markets which can offer it with limits, such as Abex &SRIM.

This article is intended only for the purpose of informational reference which is completely personal opinions of the author himself, neither constitutes specific sales proposals or insurance advice, nor expressly proposes or implies the purchase, or endorsement of any specific any financial products. Prior to any financial planning, please consult a professional and qualified Financial Advisor, or contact the author himself for a personal discussion. All contents are intended only for the reading by residents and citizens of Ontario Canada. My cell: 4163004768.

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