Since March of 2020, many commercial building owners have fallen victim to the “retail apocalypse.” The pandemic made it necessary for countless brick-and-mortar businesses across the country to adapt to both an online retail presence and a work-from-home office set-up. Consumers were also ordered to stay at home when possible. This left many stores devoid of physical customer activity and several buildings across the country that would normally be bustling with life sitting vacant. Some businesses decided to continue this path after the pandemic lessened to a point where they were allowed to reopen their doors. They found it easier and less costly to operate in this new manner. Many buildings remained uninhabited.
Vacancies not only leave a large hole in the income situation for building owners, but they also cause an insurance conundrum. Building insurance is written intended for occupancy, and when a building becomes vacant the insurance policies must be changed and written to exclude some coverages that would normally be included or to include endorsements for additional coverages. Many building owners are unaware of this fact, and if a loss happens when a building has been vacant for an extended period of time, depending on the kind of loss, it may not be covered.
It is imperative that building owners communicate with their insurance agents when a location becomes vacant, even if temporary. Losses due to a cause that is not covered, such as vandalism, water damage, theft, or building glass breakage could create a large gap in coverage and expensive repairs. A building is considered vacant when less than 31% of the square footage is in use.
Building owners that have vacant properties can work with their insurance agents and carriers to ensure they are taking the proper steps to protect their assets and keep the best coverage in place. Experts recommend that building owners closely watch the building’s mechanical systems, especially the HVAC system to keep it up to date and habitable for future use.
Also, making sure you are properly insured will give you peace of mind when accidents do happen. To find out if you have the proper insurance you need or for any insurance inquiries, contact your agent today.