Sold, Moved Out, Closing in Three Weeks: Is Your Empty House Still Insured?

Under the standard Ontario purchase agreement, the house stays your risk until closing day. Whether your home insurance actually pays while it sits empty depends on wording most sellers never read.

I’m Arthur Zhao, a Toronto real estate broker. Most sellers read the insurance clause in their purchase agreement as a formality. It isn’t. Section 14 of OREA Form 100 gives the buyer a choice if the house suffers substantial damage before closing: terminate the agreement and get all their money back, or close anyway and take the proceeds of your insurance. Think about what that second option means. If your insurer pays, the buyer has a way to finish the deal. If your insurer declines, the buyer is choosing between walking away and buying a damaged house with nothing to fix it — and you may be left with the damage, the mortgage and no sale.

That is why the weeks between moving out and closing matter. The house is still yours to lose, and an empty house is exactly the situation many home policies treat differently. Below are the four situations I would worry about in a vacant, sold house, and for each one: who carries it under the agreement, where a policy can get stuck, and what you can do before you hand over the keys.

Two questions that sound like one

Scenario one: a pipe bursts and nobody is there to notice

This is the loss I think about first in an empty house, because the damage scales with time. When someone lives there, a leak is found in hours. When nobody does, it can run for days.

Under the agreement: water damage before closing is the seller’s risk, like any other damage. If it is serious enough to count as substantial, the buyer gets the section 14 choice. If it is less than that, the buyer cannot simply walk away under section 14 — but you are still the one responsible for the house, and how a smaller problem gets resolved is a conversation between the lawyers.

Where the policy can get stuck: water is not governed by the same statutory rules as fire. The Insurance Act’s fire insurance part, which carries the statutory conditions, expressly excludes insurance against damage from leaking water pipes or plumbing (s.143(1)(a.6)). So for a burst pipe, what counts is your policy’s own wording. Many policies set their own limit on how long a home can be unoccupied or vacant before cover narrows, and some attach conditions for an empty home. Those periods and conditions vary from policy to policy — check your own wording rather than relying on a number you heard somewhere.

What you can do first: find the vacancy and unoccupancy wording in your policy before you move out; ask your insurer what it requires for an empty house; and if it sets conditions (for example about heating or the water supply), make sure they are actually met and that someone is checking the house on a schedule the policy accepts.

Scenario two: a fire

Fire is the case where Ontario law speaks most directly, because Part IV of the Insurance Act applies to insurance against fire. Section 148(1) makes a set of statutory conditions part of every such contract in force in Ontario.

Under the agreement: a serious fire is the textbook case of substantial damage. The buyer can terminate and get all deposit money back without interest or deduction, or close and take the insurance proceeds, which section 14 says you hold in trust for both parties as their interests may appear.

Where the policy can get stuck: Statutory Condition 4, Material Change. Any change material to the risk and within your control and knowledge avoids the contract as to the part affected, unless you promptly notify the insurer or its local agent in writing. Once notified, the insurer may return the unearned premium and cancel, or tell you in writing that to keep the policy in force you must pay an additional premium within 15 days.

Is moving out and leaving the house empty a material change? The statute does not say so, and I am not going to tell you it automatically is. That depends on your policy and the facts. But it is an argument an insurer can raise, and you will not be able to keep the question quiet: Statutory Condition 6 requires a proof of loss that shows any changes in the use, occupation or possession of the property since the contract was issued.

What you can do first: tell your insurer in writing that the house is sold, the closing date, and when it will be empty. Then you are dealing with a premium or a condition, not a dispute after a fire.

Scenario three: a break-in or vandalism

An empty house with no furniture and no cars in the driveway can look like what it is — and there is nobody inside to notice a broken window until the next visit.

Under the agreement: same rule. The buildings and everything being purchased — the fixtures and chattels the buyer is paying for — are at your risk until completion. A stolen appliance that was listed in the agreement is your problem to sort out before closing.

Where the policy can get stuck: as with water, theft, burglary and house-breaking sit outside the fire insurance part of the Act (s.143(1)(a.7)), so the policy’s own wording governs. Check specifically whether your policy limits theft or vandalism cover once the home is vacant or unoccupied, and from when.

What you can do first: keep the house looking lived in only if that is consistent with what you told your insurer — not as a substitute for telling them. Keep doors and windows locked, mail collected, and record the condition of the house the day you leave, room by room, including the items listed in the agreement.

Scenario four: the buyer finds damage before closing

Sometimes the loss is not discovered by you. The buyer comes through on a visit allowed by the agreement — or arrives on closing day — and finds a water stain, a broken window, a missing fixture.

Under the agreement: the timing matters more than who found it. Section 14 puts the risk on the seller until completion, and Form 100 s.2 calls for vacant possession on completion unless the agreement says otherwise. In other words, an empty house on closing day is expected — it is the stretch before that which is your exposure. If the damage is substantial, the buyer has the section 14 choice. If it is less than substantial, section 14 does not give the buyer a right to walk away, and how it is handled is something to work out with your lawyer before the transaction completes.

Where the policy can get stuck: late notice. The statutory conditions for fire require you to give written notice of a loss forthwith and take reasonable steps to prevent further damage (Conditions 6 and 9). Where water or theft wording governs instead, check your policy’s own reporting requirements. Either way, a loss that sat unnoticed for days in an empty house gives you less to work with when you report it.

What you can do first: do your own walk-through shortly before closing, not just on move-out day, and keep the policy in force until completion. Section 14 says no insurance is transferred on closing — so your policy should not be cancelled before the transaction actually completes.