How To Insights | Secure vacant property insurance
ALIGNED Explainer | Renting out a condo using Airbnb? Interviewing potential lessees for your strip mall, office building or warehouse? You may be planning to relocate into your rental property, doing renovations or simply waiting for the perfect long-term tenant to sign a multi-year lease. If you own a building that you rent, chances are that it will be either unoccupied or vacant for a short or extended period of time.
While you may be an experienced commercial and/or residential landlord, you may not be aware that typical property coverage can be voided if a property is left vacant or unoccupied for as few as just four days! That means that if you use online services to rent out your cottage or chalet, a vacancy of more than four days could put your investment property at risk.
Insight: Due to increased risks associated with vacant and/or unoccupied property, a typical vacant property policy is one and a half to three times the cost of regular property insurance coverage.
Regardless of why your property is vacant, you need to connect with your insurance broker and have them formally advise your insurance company of any planned vacancy that will last more than 96 hours. A separate insurance quote for vacant buildings isn’t always needed. However, it is important that your insurer is made aware of the vacant property and can either confirm coverage or advise vacant property insurance is required.
How to ensure your vacant property is fully covered
From a statistical perspective, vacant properties are inherently more susceptible to risk. Damage that results from vandals, undetected repairs, fire as well as other losses are some of the most frequent risks unoccupied properties face.
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As well, your existing commercial property insurance may specifically exclude coverage because of the vacancy. A vacant property can pose a serious risk to your bottom line. Vacant property insurance is designed to fill a key gap as well as cover common unoccupied property risks including:
- Hail, lightening or windstorm damage
- Malicious mischief on the property and general property destruction
- Squatters on the property who cause damage without the owner’s knowledge
- Sprinkler leakage
Yes, you can manage vacant building risks. Here’s how:
- Advise your insurance broker or insurer that your building is going to be unoccupied. Most insurance policies have conditions on vacant or unoccupied buildings.
- Deal with controllable elements. Decide if you will maintain heating while the premises is empty. If you decide to not maintain heat, make adjustments to infrastructure such as plumbing to minimize potential for damage as a result of changing seasonal temperatures.
- Maintain the fire protection system and ensure it is in working order.
- Minimize vermin infestations with professional pest and vermin control.
- Protect your property. Include security, vandalism, theft and damage protection.
- Secure the physical building with temporary fencing, board up ground floor windows and block entry points.
What can vacant property insurance cover?
Any property that is empty, infrequently used, seasonally inhabited and/or periodically rented may or may not be “unoccupied”. Usage frequency is important to accurately gauge when you are looking at coverage options. Understanding vacancy – from the insurance company’s perspective – is key when you want to buy coverage for a property that may not always be 100% occupied.
Here are a few coverages to look for when you are reviewing vacant property insurance options:
- Broad Form Perils
- Replacement Cost Insurance (if desired)
- Sewer Backup
What starts out as an occupied property may change over time. If your company is moving operations between cities, one or more of your locations may be unoccupied for a short or extended period of time. If you own a condo or cottage and decide to put on the short term rental market, chances are it won’t be 100% occupied 365 days each year.
Timing is everything when you own a vacant property.
Specialized insurance coverage can provide protection if your building becomes vacant or unoccupied. It can also protect against liabilities in the event someone is injured on your property and sues for damages. Should an unfavourable incidents may occur, vacant or unoccupied property insurance coverage is specifically designed to offer necessary protection for your assets.
If you are selling the property or if it is being renovated and/or not is suitable for occupation, vacant property insurance can give you peace of mind.
Get the best vacant property insurance in Canada. Get ALIGNED.
Our experienced commercial insurance brokers are here to help you to determine the types of coverage you need most. Connect with one of our Canadian Business Insurance Brokers today at 1-866-287-0448 or CLICK HERE!
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