Within the loss conditions of most property insurance policies is a section regarding building vacancy. This is true of both personal insurance such as home and landlord insurance, and commercial insurance such as lessor risk or other property policies. This vacancy provision limits coverage damage to vacant buildings caused by certain perils and potentially reduces the amount payable for all causes of loss. Building owners should understand vacancy provisions and when they should purchase a vacant property policy for an unoccupied building.
The Commercial Building and Property Coverage form (ISO CP0010 10/12) defines vacancy as follows:
As used in this Vacancy Condition, the term building and the term vacant have the meanings set forth in (1)(a) and(1)(b) below:
(a) When this policy is issued to a tenant, and with respect to that tenant’s interest in Covered Property, building means the unit or suite rented or leased to the tenant. Such building is vacant when it does not contain enough business personal property to conduct customary
(b) When this policy is issued to the owner or general lessee of a building, building means the entire building. Such building is vacant unless at least 31% of its total square footage is:
(i) Rented to a lessee or sublessee and used by the lessee or sublessee to conduct its customary operations; and/or (ii) Used by the building owner toconduct customary operations.
The policy then further defines the time frame for building vacancy and removes coverage for certain perils:
b. Vacancy Provisions
If the building where loss or damage occurs has been vacant for more than 60 consecutive days before that loss or damage occurs:
(1) We will not pay for any loss or damage caused by any of the following, even if they are Covered Causes of Loss:
(b) Sprinkler leakage, unless you have
protected the system against
(c) Building glass breakage;
(d) Water damage;
(e) Theft; or
(f) Attempted theft.
(2) With respect to Covered Causes of Loss other than those listed in b.(1)(a) through b.(1)(f) above, we will reduce the amount we would otherwise pay for the loss or damage by 15%.
Related Article: The Vacancy Clause
The Homeowners 3 – Special Form policy (ISO HO0003 10/00) does not define vacancy. Instead, it removes coverage for vandalism and malicious mischief for a home that has been unoccupied for more than 60 days. A similar exclusion exists for breakage of glass when the home has been vacant for more than 60 consecutive days before the damage occurred.
Vacant Building Insurance
The common verbiage between personal and commercial insurance policies regarding vacancy is the 60-day time limit. Property owners and landlords should understand vacancy provisions and the importance of securing vacant building insurance anytime the building will be unoccupied for more than 60 days.
Property that is under renovation may also need special coverage such as a builders risk policy to properly cover theft of building materials and other equipment to be made a part of the structure.
Get a Quote: Vacant Property Insurance
Contact the professionals at Safeguard Insurance to learn more about vacant building insurance for both residential and commercial structures. We work with several A-rated insurance carriers that offer vacant building insurance.