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April 7, 2021
With an increase in the vacancy rate of commercial properties due to the COVID-19 pandemic, owners are at greater risk of suffering uninsured losses.
Most commercial property policies contain vacancy clauses that significantly restrict coverage for losses at vacant properties. Business owners should review their coverage with their insurance consultant to understand their insurance policies’ limitations and exclusions in the event a property becomes or is already vacant.
If a property becomes vacant for a period of more than 60 consecutive days, coverage is void for losses arising from:
It is also prudent to note that recovery for any other covered cause of loss is reduced by 15%.
Carriers will want to know more about what you are doing to mitigate losses as the property owner. Your broker and insurance company can help develop a plan. Many insurance companies have created checklists to guide and implement a response if your building becomes vacant.
Building owners should proactively review their portfolios and buildings’ vacancy conditions with their brokers, discuss options to secure coverage, and make a plan to protect their assets in the event a property becomes vacant.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.