What is a vacant building? There are a couple of factors that determine vacancy. Generally speaking, most insurance carriers will consider a building to be vacant if less than 30% of the total building square footage is not used for an operating business – either by the building owner or a tenant.
Why should you care? A commercial property insurance policy contains a vacancy clause which limits coverage for buildings that become vacant during an insurance policy term. Typically, if a building has been vacant for 60 or more days before a loss occurs, there will not be coverage for vandalism, water damage, theft, or sprinkler leakage. Payment on other claims will also be reduced. The coverage restrictions are there because buildings that are vacant are more susceptible to vandalism and fire due to the fact that they are unoccupied.
If you own a building that becomes vacant in the middle of the policy term, be sure to contact your agent to discuss options to obtain the proper coverage.