Even an empty building needs protection, which is why vacant building insurance is essential.
When is a Commercial Building Considered Vacant?
In many commercial property insurance plans, a vacancy clause specifies that a building is considered vacant unless 31 percent of its total square footage is occupied and being used for its intended purpose. For instance, if you own a retail strip mall and less than 31 percent of the space is occupied by retailers, your building is considered vacant—even if you’re in the process of finding new tenants. Since vacant buildings are often targets for accidents, vandalism, and theft, it’s important to understand vacant building insurance.
What are the Limits of Your Commercial Property Insurance?
Not only does the vacancy clause in your commercial property insurance define when your building is considered vacant, but it also outlines the limits of your coverage during a vacancy. For example, a standard policy will cease coverage for water damage, theft, sprinkler leakage, and vandalism after 60 days of vacancy. Additionally, if a loss occurs while a building is vacant, your payment may be reduced by up to 15 percent. Recognizing these limitations can help you plan for the right insurance during a vacancy.
What are the Risks Associated with a Vacant Building?
Vacant commercial properties face increased risks such as fire, theft, vandalism, and sprinkler leakage since no one is there to monitor the property. In fact, fires in vacant commercial buildings result in over $500 million in direct property damage annually. Without someone to watch over the property, issues like a sprinkler leak can cause significant damage over time. Given these increased risks, ensuring you have insurance that supplements your commercial property insurance is crucial.
Why is Vacant Building Insurance Important?
Understanding the specific risks and limitations associated with vacant buildings highlights the importance of having vacant building insurance. This coverage helps protect your property during periods of vacancy, ensuring you’re not left vulnerable to potential losses.
If you have more questions or need to secure vacant building insurance for your property, contact us today to discuss your needs.
- Is your building vacant? You might need vacant building insurance.
What Does Vacant Building Insurance Cover?
Vacant building insurance may protect your empty building from a variety of named perils, including fire, wind, water damage, sprinkler leakage, theft, and vandalism. If you need coverage for a specific risk, options may be available to address your particular concerns. Additionally, this insurance can provide liability coverage in case of an accident occurring on the property while it’s empty, for which you could be held liable.
Whether you’re facing a planned or unplanned vacancy, it’s crucial to have vacant building insurance in place. Contact us to discuss this specialized coverage.