Vacant Property Insurance Canada Explained

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Securing Vacant Spaces: Essential Insights on Vacant Property Insurance

Understanding Vacant Property Insurance for Closed Businesses

Are You Closed for business? Here is some information about unoccupied property…

Due to mandatory closures, shifting operations, or property transitions, your business premises might be vacant. Understanding that a closed business doesn’t equate to diminished commercial risks is crucial. Vacant property insurance becomes vital in safeguarding these unoccupied spaces against potential hazards and liabilities.

If your company moves operations between provinces or cities, one or more of your locations may be unoccupied for either a short or extended time. As your business needs evolve, so may your property insurance requirements.

Vacant property coverage may also be a viable option if your business is in the process of:

  • Selling the property,
  • Filing for bankruptcy, or
  • If the property is under construction and/or not suitable for use.

Vacant property insurance is designed to provide specialized coverage for these situations, ensuring your unoccupied properties remain protected.

4 days Unoccupied? Time to Consider Vacant Property Insurance

For business owners with brick-and-mortar locations, understanding the implications of an unoccupied property is critical. If your business site is vacant for even a short period, exploring vacant property insurance options is crucial. This coverage is designed to protect your assets during transition or temporary closure.

According to the International Risk Management Institute (IRMI),

“A vacant building contains little or no furniture or other personal property. Even if it is not vacant, a building is unoccupied when people are absent.1

Source: 1 IRMI

A vacancy of as few as 4 days (96 hours) may be sufficient for your property to be considered unoccupied. Insurance companies in Canada specifically state the amount of time an insured property is considered unoccupied in your insurance policy.

Vacant Property Insurance: A Critical Safety Net

When your business premises are vacant, they become vulnerable to various risks, such as vandalism, theft, undetected repairs, fire or environmental damage. Vacant property insurance is a safety net, providing specialized coverage that standard property insurance might not offer. This insurance is essential for maintaining financial protection when your property is unoccupied.

How vacant property insurance in Canada fills a critical gap

Vacancy can cause a coverage gap. Therefore, it is important to understand why and what insurance coverage options are available for your business.

Your existing commercial property insurance may exclude coverage because of the vacancy.  In addition, the International Risk Management Institute (IRMI) provides the following insights:

“Vacancy Provision — property insurance policy provision found in most commercial property policies that severely restricts coverage in connection with buildings that have been vacant for a specified number of days (typically, 60 days). Some forms also restrict coverage in connection with buildings that have been unoccupied for a specified number of days.2

Source: 2 IRMI

101: Understanding Risks and Coverage for Vacant Properties

Vacant or unoccupied properties present unique risks, often overlooked in standard insurance policies. Vacant or unoccupied property insurance coverage is designed to fill significant gap. Vacant property insurance is specifically crafted to address these risks, providing vital coverage where traditional policies might fall short. This specialized insurance plays a critical role in temporarily safeguarding properties without occupants.

Coverage for a Range of Unforeseen Events

Vacant property insurance protects against several common risks that are particularly relevant to unoccupied spaces. These include:

  • Fire: A major threat to any property, but especially to vacant ones where a small fire can go unnoticed and cause significant damage.
  • Lightning, Windstorm, or Hail Damage: Natural elements can wreak havoc on unprotected properties, leading to costly repairs.
  • Explosion: Unoccupied properties can be susceptible to gas leaks or other hazards that might lead to explosions.
  • Sprinkler Leakage: In colder climates or in cases of system malfunction, sprinkler systems can leak or burst, causing water damage.
  • Vandalism: Vacant properties are more vulnerable to vandalism, which can cause superficial and structural damage.
  • Malicious Mischief: This includes intentional damage to the property, such as breaking windows or damaging the interior.
  • Squatters and Unauthorized Occupants: The presence of squatters can lead to unexpected damage, theft, or legal issues, often without the property owner’s knowledge.

Why is Vacant Property Insurance Critical?

The risks associated with vacant properties can lead to substantial financial losses. Regular commercial property insurance often excludes or limits coverage for these risks, particularly when the property remains unoccupied for extended periods. Vacant property insurance is designed to fill these gaps, offering property owners and managers peace of mind.

Vacant or unoccupied property insurance can provide protection if your building is unoccupied for as few as four days. Vacant property insurance also protects against liabilities in the event that someone is injured on your unoccupied property and sues for damages. Due to the increased risks associated with owning an unoccupied or vacant building, a typical vacant property policy is one and a half to three times the cost of regular property insurance coverage.

This type of insurance is essential for properties in transition – whether they are awaiting sale, undergoing renovations, or are temporarily closed. In these scenarios, the standard insurance might not provide adequate protection, making vacant property insurance an indispensable component of risk management.

Given the unique challenges and risks associated with vacant properties, property owners must consider vacant property insurance as part of their comprehensive risk management strategy. This insurance ensures that unoccupied properties are adequately protected against various risks, safeguarding the property owner’s investment and providing essential coverage in times of vulnerability.

101: Vacant Property Risk Management

In addition to vacant property coverage, you can proactively manage risks. Ways to manage unoccupied property exposures include:

  • Sealing off windows and doors
  • Removing valuable inventory and/or goods
  • Hiring a contractor to erect temporary fencing
  • Installing alarm systems that are triggered by intruders, fires or floods
  • Regularly inspecting your unoccupied for damage or threats of damage
  • Hiring third party security to monitor and/or regularly physically visit and inspect the building

ALIGNED Insurance Solutions for Vacant Properties

At ALIGNED Insurance, we understand that every business’s situation is unique, especially when it involves vacant properties. Our team is dedicated to offering tailored vacant property insurance solutions that align with your specific circumstances. Whether your property is temporarily vacant, undergoing renovations, or on the market for sale, we have the expertise to ensure it’s adequately protected.

Expert Advice on Vacant Property Insurance

Navigating the complexities of vacant property insurance can be challenging. Our experts are here to help you understand the nuances of this coverage and how it applies to your vacant property. We guide the best options to safeguard your unoccupied spaces, giving you peace of mind during transitional phases.

Ready for Comprehensive Vacant Property Protection?

If you’re facing a temporary or extended vacancy period for your business property, contact us for a customized vacant property insurance quote. Let us help you protect your investment during times of change and ensure your property remains secure and insured.

Assurance with ALIGNED across Canada

ALIGNED proudly serves thousands of clients nationwide as a 100% Canadian-owned premier insurance brokerage. With offices in Toronto, Calgary, and Vancouver and backed by our national operations centre in Cambridge, Ontario, ALIGNED helps you create, negotiate, and deliver trustworthy business insurance and risk management strategies and solutions to your organization.

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