Canadian Underwriter

Empty nest: How to talk to your clients about vacant home policies

September 29, 2021   by Brooke Smith

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Clients may need a vacant home policy for several reasons.

“The most common one right now is people purchasing properties and looking to either improve them or completely rebuild,” said Rhys Doiron, group home & auto coordinator with Ontario brokerage Youngs Insurance Brokers. “Other times they’ve been inherited, or it’s a recreational property.”

However, the main difference with a vacant home policy, according to Doiron, is “sometimes we have a limited availability of coverage we can get for [clients].”

The named perils — fire, wind, hail — are included, but getting more coverage will depend on “how much effort the client is willing to put in to maintaining the property,” Doiron said.

As a result, brokers need to help clients devise a loss prevention plan. “When you have a vacant property, you want to have a plan in place where you or a responsible person is going to be keeping an eye on it,” Doiron said. “You still want to maintain the property because you’re still liable for bodily injury or anything that happens on that property.”

Pricing also needs careful explanation from brokers. Depending on the risk, pricing can sometimes be more than for a person’s primary home, Doiron said. According to New York-based Policygenius, a vacant home policy can cost anywhere from 25% to 50% more than a standard homeowner policy, depending on the insurer.

“That can confuse a lot of people because they say, ‘Well, I’m not using [the vacant property].’ So it’s explaining to them that, if a pipe bursts in your house, you’ll usually know that same day something’s wrong, but [with] a vacant property that you’ve left alone, if no one’s checking on it regularly, that problem could have been persisting for weeks or months.”

To help get clients the best rates and coverage, “we try to come up with a plan with our clients for that loss prevention, so they are a best-in-class risk,” Doiron said.

That means ensuring there’s snow removal in place, for example, and that clients are maintaining the property. These initiatives would show the insurer that “the client has a good attitude toward insurance and wants to take an active role in loss prevention,” he said.

But sometimes that active role can be challenging, simply because the client’s primary location isn’t close to the secondary property.

“At this point we may suggest they meet their neighbours or even have a property management company to take care of those things,” Doiron said. “That’s still taking an active role and making sure they’re still protecting their property.”


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