Commercial Building Vacancies – A Property Insurance Concern

These past few years, the economy has been merciless. We’ve seen homes lost, businesses folding, and the American public as a whole has been agonizing as a result. It’s a trickle down effect. When jobs are lost, people don’t have money to spend, and businesses must close their doors. When those doors are closed, commercial building owners don’t have tenants to fill their space. All too often, it takes months or years before a vacancy is filled. And when things can’t seem to be any worse, this creates a whole new potential problem from an insurance standpoint.

Under the commercial property insurance form drafted by the Insurance Services Office and used by most insurance carriers, there is a vacancy clause in the property policy form which alters insurance coverage for buildings vacant for more than 60 consecutive days. Insurance carriers will generally not pay for any physical loss or physical damage caused by any of the following perils:

For any other covered causes of loss besides these, insurance carriers will usually reduce the amount they would otherwise pay by 15%.

If you own a commercial building which is currently vacant, contact your insurance agent to discuss possible alternatives or resolutions. As if the unrelenting economy hasn’t thrown enough at us, make sure you’re aware of this very important clause on your property insurance policy and stay protected!

-JK