Closed? Your vacant property needs insurance. Here’s how to get it.
Tick-tock, tick-tock. Yes, time is money. If you own or rent a commercial property, anytime it sits empty or unused costs you money. A building you own may be a vacant property for any number of reasons. Perhaps your tenant suddenly declares bankruptcy due to unforeseen circumstances.
Maybe an extreme weather situation caused significant damage that requires a complex rebuild that can only be done by specialty trades. You might be renovating to attract a new tenant who wants a high-value property rental. Or you may simply be closing your doors temporarily due to a difficult economic situation.
It doesn’t matter why your commercial property is vacant, it still needs insurance coverage.
Even if your property is empty, no employees or clients are on-site and operations are shut down, unforeseen events can still happen. This is because your business property still faces a wide range of material risks. Regardless of why your commercial property is vacant, specific coverage is needed when a property is unoccupied for as little as four days.
96 hours empty? You own a vacant property site
At some point, your current commercial property policy may exclude coverage. A vacancy of 4 days – just 96 hours – might be why you now need separate vacant property insurance and special risk management actions.
Managing a vacant building would seem to have fewer hazards to worry about. Fewer people, less traffic, less potential liability situations would seem to make sense…right?
The reality is that day-to-day risks still impact an unoccupied or vacant property. For example, risks such as:
- Hail, lightning or windstorm damage
- Squatters on the property who cause damage
- Leaking sprinklers
- Malicious mischief to the property and general property destruction
- Riot or civil commotion damage
- Sinkhole collapse
- Smoke damage
It costs you money for your property to be unoccupied. And that’s why risk management – including securing vacant property insurance – are is so important.
Time-sensitive risks to manage in a vacant property
If your commercial property will be empty, unoccupied and/or otherwise vacant for more than four days, be proactive when it comes to managing risk.
Here are a few things that you can do to manage vacant property risks:
- Maintain security and surveillance efforts and activities during any vacancy.
- Use an on-site or surveillance security presence.
- Potentially install temporary fencing around your vacant property to minimize trespassing or other criminal activity.
Over a short or long period of time, a vacant property can catch unwanted attention. Trespassers, arsonists, squatters, thieves and other criminals may take note of your vacant property. When there are no people using or tenanting your unoccupied property, your security systems can be your eyes and ears on-site.
Good security best practices can also help to reduce the chance of a claim. As well, be wary about small hazards – such as an exposed electrical wire or a slow water leak. These types of small risks are normally detected quickly when a building is occupied. Small risks that are identified quickly are oftentimes also repaired before they worsen and cause a loss in a vacant property.
During the vacancy, it is less likely that small hazards will be immediately corrected. Because of this, a relatively small hazard that goes undetected could escalate into a much larger problem. One such example of this is mould. Gradually occurring, mould damage can add up to significant long-term risks and problems.
Don’t forget to keep watch for environmental risks
Do you or your tenants use your property to store chemicals or other pollutants on-site? If your answer is yes, take note. These materials must be removed or adequately stored in order to prevent seepage and/or leaks.
In the event of an environmental risk event, businesses can be held liable for cleanup, particularly, in the case of groundwater contamination.
Be aware that underground storage tanks can represent an even bigger threat to both the environment as well as the property owner. Most importantly, cleanup costs for pollution are typically excluded under normal and vacant property insurance policies. This is why a separate site pollution policy may be needed if potential pollutants will remain on site while your commercial property is vacant or unoccupied.
Vacant or soon-to-be-vacant property? 5 ways you can take control of risk…
Most business insurance policies typically exclude coverage for a vacant property that is unoccupied for more than a specifically defined time period. To prevent loss situations while your property is empty, vacant or occupied, you can:
- Advise local police department as well as trusted neighbours of the property vacancy.
- Inform your local fire department of any materials on site that could potentially impede firefighting.
- Inspect the vacant facilities regularly or hire a guard service for daily observation.
- Install temporary fencing and/or lighting.
- Remove unnecessary materials and combustibles from the premises.