What is a Vacancy Clause?

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In an effort to reduce unintended risk, almost all dwelling policies include  an ‘occupancy requirement’ and they include wording that automatically reduces or ceases coverage if the property is not occupied for a certain period of time. This is included in policies so that companies which have issued coverage for an occupied dwelling do not end up insuring a vacant property – which poses a much higher risk.

While each company’s policy is a bit different, it is standard that after 60 consecutive days of vacancy (30 days for some companies) the policy either (1) cancels altogether so that there is no insurance in place, or if the policy does remain in force, (2) all additional coverages are terminated except for loss by fire or lightening.

A ‘Vacancy Clause‘, which is purchased as a separate endorsement for an additional premium, is used to maintain coverage and/or prevent the policy from canceling in the event that a property becomes vacant as mentioned above until such time as it becomes reoccupied.

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