Although it is making a comeback, Calgary’s rental market remains tough for landlords right now. An article published by the CBC in February of this year titled “While homes sit unsold, Calgary’s rental market is heating up: CMHC” states that even though the market for new homes is still in a bit of a slump due to high unemployment rates, less disposable income, higher interest rates, and more stringent rules for borrowing, vacancy rates have declined as people remain or move into the rental market.
You never know what could happen with your rental property. Tenants might leave and you might not be able to find any suitable replacements. Or there simply are no tenants to be found. For these reasons, vacant home insurance is a necessity for owners who rent out their property (or properties). The longer your property sits vacant, the more chance there is for something to go wrong.
How Insurance Companies View Vacant Properties
Insurance companies think of any property that is vacant as more of a risk. This is because there is nobody there to watch for small issues that could easily turn into big problems. In the initial days of vacancy, your provider may not provide coverage for broken glass, weather damage, and water damage. If your rental property is untenanted for 30 days or more, it could be thought of as a vacant property. If something were to happen, such as theft, vandalism, an accident, or an act of nature, your current insurance may be considered null and void.
If you are having trouble finding tenants to occupy your property, be sure to contact your insurance broker or provider, or read your insurance agreement thoroughly. Inquire or look for parameters around vacant properties. You may need to be able to provide proof that the property is being visited regularly and tended to. Or it may be that you need to purchase vacant home insurance.
What is Vacant Property Insurance?
Vacant home insurance provides the same sort of coverage as regular home insurance. It will protect:
- The structure of your house or condo. Remember that homes or condos should be covered for their replacement cost in the case of a catastrophic fire, not their market value.
- Any detached private structures such as a garage, shed, or outbuilding.
- Your personal property. If your rental property is furnished, you may want to consider replacement cost insurance over actual cash value coverage.
- Liability, which provides the necessary funds for any lawsuits resulting from an accident on your property.
How to Make Your Home Look Occupied
In addition to vacant home insurance, additional steps you can take to keep your vacant property safe include doing what you can to make your property seem occupied at all times. Here are some simple tips:
- Keep the lawn cut, the sidewalks shovelled, and remove debris and garbage as quickly as possible
- Close the blinds to accessible windows so that thieves can’t see inside.
- Have the mail picked up regularly (even vacant properties get junk mail).
- Set outside and inside lights on timers, and rotate which lights come on, so it seems like there are people inside.
- Consider a security system. Cameras are great for scaring off burglars.
If possible, enlist the help of neighbours you trust to help keep an eye on things. Often your best bet is to lead by example. If you show you care for your property – even if you don’t live there – and are doing what you can to bring quality people into the neighbourhood to help enhance the quality of life for everyone, then it will only be natural for folks to look after each other.
Rental Property Insurance
Once your rental property is finally occupied, the next step is proper rental property insurance. Rental property insurance differs from homeowners insurance in several key ways. Rental property insurance is designed to cover the actual land and building being rented and provides liability protection, but it does not cover any of the possessions or items of value inside the building. It is your tenant’s responsibility to protect his or her own assets by purchasing a renter’s insurance policy.
Also, don’t forget that your rental property premiums are tax-deductible, as they are considered a business expense. As such, the property taxes you pay on your rental unit, as well as the money you spend marketing and maintaining the property, are also tax-deductible. However, make sure that you accurately report all rental income you receive from your tenants on your income tax return.
Trust Lane’s for all Your Insurance Needs
Lane’s Insurance is a leading Alberta-based insurance brokerage, providing comprehensive insurance services to both residential and commercial clients. If you would like to discuss your specific needs with a knowledgeable broker, please contact us. We provide quick, free, no-obligation insurance quotes, and our courteous insurance professionals are happy to help you understand all the ins and outs of any type of coverage you may need.