March 20, 2018
Whether it is a long awaited trip abroad or spending your summer at the cottage, one of the things homeowners desire is peace of mind when leaving their home or principal residence for long stretches. It is common to ask trusted neighbours, family or friends for a favour to “watch your home” while you are away. We all have done it at least once. A question that rarely is considered seriously is what happens if, while you are away for a prolonged period, disaster strikes? This might be frozen pipes, or a broken window or the security alarm system is triggered. And what about lawn and property maintenance?
Not only could you find out that you have failed to meet your insurance policy obligations, meaning that any claim on the property for any damage may not be covered under the policy and declared null and void, but moreover, is it really fair to place such a level of responsibility and liability on your neighbour, family or friend, regardless of their trustworthiness?
“It is very important that homeowners read their plan to understand the schedule set out by the insurance policy. Can you leave your property for a week? Three days? Is there a minimum threshold on property care? Every policy and insurance company is different in terms of what is required,” says Teresa Casella, Senior Vice President of Business Development for Veranova Properties Limited. “If you are planning to be away, it is important to understand you cannot just set your own schedule.”
Casella strongly advises homeowners planning to be absent from their property hire a professional property management firm to regularly inspect it based on the insurer’s requirements. Not only does a professional firm know what to look for and what to do in an emergency, they provide the kind of documentation and audit trail insurers want to see and expect, a requirement that is commonly overlooked by homeowners as neighbours, family or friends would typically not prepare inspection reports.
“A professional property inspector will maintain a written sign-in sheet to log visits and property inspection reports. They will also take pictures of the home, or any damages to the home with a date and timestamp. This provides insurers (and the homeowner) with a clear audit trail to back up any claim and to demonstrate the property had professional oversight in place,” says Casella.
But what about real estate investors with tenants? Do the same insurance rules apply?
While different insurers have different criteria, generally, if a tenanted property is unoccupied (for example, the tenants have gone to Florida for the winter), then insurers expect a level of reasonable care be maintained for that property. Water should be shut off, system and appliances drained and the property should be monitored. There is a typical expectation for tenants to inform the property owner if they will be away for more than 96 hours, and ensure the measures above are in place or they may not be covered under their tenant’s policy for personal belongings.
If a property becomes vacant for longer than 30 days, real estate investors should know that there is no coverage whatsoever for any peril unless the insurance company is made aware and vacancy is granted. Even with a granted vacancy permit, most policies will exclude damage caused by water, vandalism and glass breakage. It is extremely important for property owners to report any change in occupancy to the insurer so that they avoid declined coverage in the event of a loss.