Vacant Property Insurance Policy Information
Vacant Property Insurance. When a commercial property becomes vacant, the owners often wrongly assume their existing insurance policy will provide coverage during the period of vacancy. Since this is not usually the case, specific vacant property coverage is important for business owners to consider.
This vacant property insurance offers broad package, or monoline, property and general liability coverage for vacant, and certain partially vacant, commercial properties, condo units, or rental space - with or without renovation work.
Vacant property insurance protects your unoccupied buildings from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked vacant property insurance questions:
- What Is Vacant Property Insurance?
- How Much Does Vacant Property Insurance Cost?
- How Is Vacant Property Different From Commercial Property Insurance?
- What Does Vacant Property Insurance Cover?
- What Are Common Vacant Property Insurance Exclusions?
- What Does Vacant Property Insurance Cover & Pay For?
What Is Vacant Property Insurance?
Vacant property insurance is a type of insurance coverage designed specifically for properties that are not occupied by tenants or owners. This type of insurance provides protection against loss or damage to the property and any structures on the property while it is unoccupied.
This coverage can include protection against theft, fire, and other perils, as well as liability coverage in the event of injury to a third party while the property is unoccupied.
Vacant property insurance is often required by lenders for properties that are in the process of being sold or that have been abandoned for an extended period of time.
How Much Does Vacant Property Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small vacant property ranges from $37 to $59 per month based on location, size, payroll, sales and experience.
As with all insurance policies, there will be a number of factors that the insurer will take into consideration when calculating your premiums. The importance of each factor will differ between insurers meaning that premiums can vary, so it's important to shop around for a policy that suits your needs.
Typical factors include the value of the property, how long you wish to be insured for, why the property is unoccupied, the security that you have in place and your address. The security of your property will have a huge effect on your premium, so make sure that every entry point to your commercial property is secure. If you have an alarm, ensure that it's activated when you're away or it could invalidate your insurance.
How Is Vacant Property Different From Commercial Property Insurance?
Since there are no operations there, vacant commercial properties tend to pose more risks than occupied ones. Acts of liability and fire, for instance, are potentially serious issues with a unoccupied property. Intruders might get hurt on broken floor boards or old fencing, and file a claim or sue.
Some typical property insurance policies won't cover these types of risks on a vacant property, but vacant property insurance is an option for you.
What Does Vacant Property Insurance Cover?
There are several increased risks associated with empty business properties. These include:
Liability: Optional liability provides coverage if you're found legally responsible for an accident on the vacant premises, that causes injury to someone or causes property damage.
Burst Pipes: This is a prime hazard for unoccupied properties due to the fact they are often left unheated. The water damage to vacant buildings is one of the reasons for which insurers insist on different coverage for unoccupied properties.
Flood and Fire: These hazards are considered by insurers to be more serious if they happen in unoccupied properties, as they stand more chance of getting out of control - which means greater levels of damage, and increased expense.
Squatters: Likewise, squatting is a serious problem for commercial landlords - not only because of the hassle and expense of removing uninvited occupants, but also due to the damage they may cause. People who enter a commercial property illegally and by force are unlikely to treat it with respect.
All these risks and hazards will be covered by a good vacant property insurance policy - which gives landlords the peace of mind to get on with the other aspects of their business.
What Options Are Offered On A Vacant Building Policy?
Named Peril Coverage - This covers "perils" (things like fire, explosion, lightning, wind and hail) that are specifically named in your vacant property insurance policy, subject to exclusions and conditions.
Agreed Loss Settlement (Total Loss) - If your unoccupied property is destroyed by a covered loss (a total loss situation), you receive the full amount of insurance you purchased on your vacant property insurance policy, minus any applicable deductible.
Actual Cash Value (Partial Loss) - In the event of a covered loss (a partial loss or partial damage), this covers the cost to replace or repair your damaged building, with a deduction for depreciation, which reflects the age and condition of your building, minus any applicable deductible.
Landlord Flexibility - If you rent your property, and it goes vacant between tenants, you can cover it with a unoccupied property policy. When someone moves in, it can easily be endorsed to a landlord or owner-occupied policy, all without having to cancel the policy or write a new one. (not available in all states).
Short Term Coverage - You don't have to insure your vacant commercial property for the usual 12 months required by a normal policy. Most firms allow you to arrange cover for three, six, nine or 12 months, with the option to extend if necessary. So, you might take out a three-month policy to cover your property while it is up for sale. But if the sale takes longer than expected, you could simply extend the policy as required.
Full 12 Month Policy - You can get flexible payment plans and a pro-rated cancellation, subject to minimum earned premium. This comes in handy in case you move back into the commercial property, sell it, find a tenant, or need to cancel for some other reason before your year is up.
Special Coverage - If your commercial property is a historical building, has a thatched roof or any other less common features, you may need special insurance to protect it while it's unoccupied.
What Are Common Vacant Property Insurance Exclusions?
Every policy will have exclusions that apply to it, but they'll vary from insurer to insurer so always read your terms and conditions. Examples of typical exclusions to look out for include:
- Loss or damage as a result of unforced entry e.g. when windows or doors are left open or unlocked.
- Damage caused by major works, for example extensions and structural repairs.
- Damage caused by contractors (contractors should have their own insurance).
Requirements For Unoccupied Property Insurance
Before an insurer will offer you policy, they'll want to know what condition your property is in. If the building is in a poor state of repair with broken windows and boarded-up entrances, they're unlikely to insure it. It can also be a good idea to remove any valuables that you have at the property and keep them somewhere safer.
Some insurers may require you to take steps to protect your commercial property while you're away, such as having approved locks on your doors and windows, a working burglar alarm and timer-controlled heating to ensure that your pipes don't burst in cold weather. You may also need to switch off all utilities and drain the water system.
What Does Vacant Property Insurance Cover & Pay For?
Vacant property owners may face lawsuits for a variety of reasons, such as:
- Injury or property damage: If someone is injured or their property is damaged while on the vacant property, the owner may be sued for negligence.
- Code violations: If the vacant property violates local or state building codes, the owner may be fined or sued by the government.
- Trespassing or theft: If someone enters the vacant property without permission and is injured or steals something, the owner may be sued for not securing the property properly.
- Environmental issues: If the vacant property has hazardous materials or chemicals on it that were not properly disposed of, the owner may be sued for environmental damages.
Insurance can help protect vacant property owners in the following ways:
Liability insurance: This type of insurance can help cover legal fees and damages if someone is injured or their property is damaged while on the vacant property.
Property insurance: This type of insurance can help cover damages caused by events like fire, theft, or vandalism.
Code violation insurance: This type of insurance can help cover fines and legal fees related to code violations.
Environmental liability insurance: This type of insurance can help cover cleanup costs and legal fees related to environmental damages.
For example, if a trespasser is injured while on a vacant property, the owner may be sued for negligence. Liability insurance can help cover legal fees and damages awarded in the lawsuit. If the vacant property catches fire and causes damage to neighboring properties, property insurance can help cover the damages. If the government fines the owner for code violations, code violation insurance can help cover the costs. Finally, if hazardous materials are found on the vacant property and cause environmental damage, environmental liability insurance can help cover cleanup costs and legal fees.
Vacant Property Insurance - The Bottom Line
A vacant property faces an increased risk when it comes to potential damage. Whether your property will be unoccupied for just a few days or for several months, make sure to update your insurance policy and follow a few simple steps to protect your building(s).
Additional Resources For Commercial Property Insurance
Read up on small business commercial property insurance, including how business property insurance protects your company's building's and/or their contents from damage, destruction, theft and vandalism.
- Apartment Building
- Business Interruption
- Commercial Flood Insurance
- Commercial Property
- Condo Association
- Contractors Equipment
- Duplex Rental Property
- Equipment Breakdown Protection Insurance
- Homeowners Association Insurance
- Inland Marine
- Jewelers Block
- Manufacturing And Mercantile Rental Property
- Mobile Home Park
- Non-Residential Building Operators
- Office Buildings
- Shopping Center & Strip Mall
- Vacant Land
- Vacant Property
- Specialty Habitational
- Specialty Inland Marine
- Specialty Property
Commercial property insurance is a type of insurance that provides coverage for businesses against losses or damages to their business property. This can include buildings, equipment, inventory, and other assets owned by the business.
There are several types of commercial property insurance, including standard property insurance, business interruption insurance, and contents insurance.
- Standard property insurance covers damages to the physical structure of the business, such as the building, walls, and roof.
- Business interruption insurance covers lost income and expenses incurred during the repair or rebuilding process.
- Contents insurance covers damages to personal property within the business, such as office equipment and furniture.
Commercial property insurance is important for businesses of all sizes, as it helps protect against financial losses due to unforeseen circumstances, such as natural disasters, theft, or vandalism. It can also provide liability coverage in case of accidents or injuries on the business property.
To determine the appropriate level of property insurance for a business, it is important to consider the value of the business's assets, the location of the business, and the potential risks it faces. Many businesses choose to work with an insurance agent or broker to help identify the best coverage options for their specific needs.
Overall, commercial property insurance is a crucial part of any business's risk management strategy, helping to protect against financial losses and ensuring the long-term viability of the business.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Signs, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Contractors' Equipment, Fine Arts, Cyber Liability, Employment-related Practices, Automobile Liability and Physical Damage, and Stop Gap Liability.