How A Change In Occupancy Impacts Your Insurance

One of the most important changes that can happen to a home is an occupancy change.  Many people don’t realize that if insurance companies aren’t notified of the change in occupancy within 30 days of it happening, their policy may no longer be active, and can indeed be voided. That is why it is very important to mention any changes to your broker when they happen.

There are 5 main ways a home policy can be done up as far as occupancy types.

1. Owner Occupied

This one is pretty self-explanatory, but when the person on land titles/owner of the home lives in the house as their full-time residence, this is considered an Owner Occupied Home.  This type of occupancy qualifies for the best coverage available as owners are viewed to take the best care of their home, and insurance companies feel these are the best risks to take on as owners typically maintain, and take great care of their home which is usually there largest purchase in life.

2. Family Occupied

Insurance companies all have their different rules as to what counts as a family member, but when the person on land titles/owner does not live in the house but has allowed a relative – typically son, daughter, mother, father, sister or brother to live in the house, the coverage will remain as if it were an owner occupied home with changes to the rates based on the owner not living there and possible changes in age discounts.

3. Renter Occupied

When you change your home to have a renter living in there vs having yourself as the owner or a family member, this significantly changes the type of policy you are required to have.  The coverage you qualify for changes and typically the price will change as well.  The exposure and change in risk to the insurance company when the owner isn’t living in the home changes the way they offer coverage.  If you think about it, having a stranger live and take care of the home is not the same as someone who has a financial interest in it or ownership of it.

4. Unoccupied

Un-occupancy occurs when the intention is to return to the home at the end of the time away.  For those of you who like to vacation or snowbird and head south with the full intent to return to that home as your owner occupied residence, this is looked at as an unoccupied house and not vacant. In this case there are no changes to the policy itself, but you may want to check with your broker as most policies have requirements for checking a home during un-occupancy in order to maintain coverage.

5. Vacant – No Occupant

A vacant home is where the occupant has no intent to return.  I don’t plan to go too in-depth with vacant homes as I could talk for hours about them, but vacant homes are the highest risk and have the least amount of coverage offered as there is no occupant to look after the home on a daily basis.  Typically you will see coverage for Fire, Lightning, Wind & Hail only, and a settlement which takes into consideration depreciation.  Needless to say most people don’t want to hang onto a vacant home longer then they have to.

The moral of the story is any change to your home which has to do with occupancy can really change what type of coverage you have.  If your broker hasn’t been informed of the change there is a chance you have no coverage at all.   Let’s Talk.  Call your broker today to make sure your home has the right occupancy!