Insuring a Vacant Home as Executor in Ontario: What to Check

After a death, the house often sits empty while the estate is sorted out. That period can last for months, and insurance is easy to overlook when there is so much else to do.

This article explains why vacancy matters to an insurer, what an executor should ask, and what to keep on record. Policies differ widely, so the wording of your policy is what counts, and a lawyer or broker can read it with you.

Why an empty house is an insurance issue

An estate trustee collects the assets, pays debts and taxes, and distributes what is left. Protecting the house until it is sold or transferred is part of looking after those assets. A fire, a burst pipe or a break-in during that time could reduce what the beneficiaries receive.

Many home policies are written for a home that someone lives in. Insurers may treat an unoccupied or vacant home as a higher risk, and the policy may limit or exclude certain types of loss after a period of vacancy. The exact wording and time periods are in your policy, so read the sections on occupancy, vacancy and unoccupied dwellings.

Do not assume that the policy continues as it was. Even if the premium is paid automatically, the insurer may need to be told about the death and the change in how the home is used.

What to ask the insurer

Contact the insurer or broker as soon as you can, and follow up in writing so there is a record. Be ready to give the date of death, the address, your name and your role as estate trustee.

• Does the policy continue after the death, and in whose name?
• Is the home now treated as unoccupied or vacant, and from what date?
• Which types of loss are limited or excluded for an empty home?
• Is a different policy or an endorsement available for vacant homes?
• What inspection or upkeep does the insurer expect, and how often?
• What happens to the premium and to any mortgage lender's requirements?

If the insurer offers a vacancy endorsement or a separate policy, ask for the quote and the terms in writing and compare what is covered. If you are told something over the phone, ask for it to be confirmed by email.

Looking after the house while it is empty

Insurers often expect basic upkeep, and good habits protect the property in any event. Check the house on a regular schedule and keep a log with dates. Heat, water and power decisions, and whether the locks need changing, depend on the policy, the season and your authority, so confirm them before acting.

• Visit regularly and record each visit with the date and photos.
• Keep mail from piling up and remove flyers.
• Keep the heat at a safe level in cold weather, or ask a plumber about draining pipes.
• Keep the lawn cut and the snow cleared.
• Remove valuables, important papers and firearms or hazardous items safely.
• Keep receipts for all expenses, as they are estate costs.

If the house was rented to tenants, the rules for rental income and the tenants are different, and the insurance questions change as well. Rental income the estate earns after death is reported on a T3 return.

The house in the estate: value, authority and timing

Estate Administration Tax is charged on the value of the estate as of the date of death. Real property that does not pass by right of survivorship generally needs probate. For estates where the application was made on or after January 1, 2020, there is no tax if the estate is worth $50,000 or less, and above that the rate is $15 for every $1,000 or part of the estate value. Because the house is often the largest asset, its value at the date of death is worth documenting.

There are also limits on how quickly a house can pass to a beneficiary. A transfer of land to a beneficiary within 6 months of death must be accompanied by an executor's statement that there is no surviving spouse, a court order, or the spouse's consent. A sale is not barred, but the proceeds cannot be distributed in that period. In practice, an empty house may stay in the estate for some time, which is why the insurance needs to be right.

For income tax, capital property such as a house is deemed disposed of just before death at fair market value. How the tax rules apply to a house depends on your situation, so it is worth confirming with an accountant.

What to do next

Treat the insurance call as one of the first tasks, not the last. Gather the policy, call the insurer, and confirm the answers in writing. Then set up a simple schedule for checking the house.

• Find the current policy and the date the premium is due.
• Call the insurer or broker and report the death.
• Ask in writing how vacancy affects your cover and ask for endorsement options.
• Confirm whether the mortgage lender must be told.
• Set up regular house checks and keep a log.
• Get a valuation of the home at the date of death.
• Speak with a lawyer if you are unsure of your authority to act on the property.

Frequently asked questions