Vacant Property Insurance Overview
Whether due to financial difficulty, scheduling issues with tenants or other reasons, your business may have a vacant property at some point which may be excluded under your current policies and require separate vacant property insurance and special risk management steps to be taken. When determining what kind of risk management efforts are necessary, it may seem that compared with managing a fully functioning commercial building, a vacant property would have substantially fewer hazards. There is less traffic, and therefore less liability – right?
In reality, vacant properties present a unique set of risks that must be managed effectively to avoid costly losses at a time when money may already be tight for building owners. Vacant buildings might be unoccupied, but they should not be left unattended and some special steps may be required to be taken to secure vacant property insurance.
Vacant Property Insurance – Risks & Risk Management Strategies
ALIGNED encourages landlords and/or property managers to consider the following risks and loss control steps to avoid expensive losses and potentially decrease the cost of vacant property insurance.
Undetected Damages Risks
Small hazards – like an exposed electrical wire or a slow water leak – are normally detected and repaired before they can worsen and cause loss in an occupied building. However, when buildings are unoccupied, these small hazards are less likely to be corrected immediately and can escalate into larger problems. Gradually occurring damage, such as mould, can be equally threatening.
Crime and Liability Risks
Although there are no tenants, it is important to maintain security and surveillance efforts to reduce the chance of a claim, as your company can be held liable for criminal activity or accidents that take place on your premises. Vacant properties attract trespassers, arsonists, thieves and other criminals. It is important to maintain an on-site or surveillance security presence and possibly install temporary fencing around the location to minimize trespassing or other criminal activity.
Facilities that are used to store chemicals or other pollutants on site must have these materials removed or adequately stored to prevent leaks and seepage. Businesses can be held liable for cleanup in the case of groundwater contamination. Underground storage tanks can represent an even bigger threat to the environment and property owner. Cleanup costs for pollution are typically excluded under normal and vacant property insurance policies and a separate site pollution policy may need to be explored if potential pollutants will remain on site.
Vacant Property Insurance -Loss Control Steps
To prevent claims in vacant properties, follow these loss control guidelines:
- Advise local police department and trusted neighbours of the vacancy
- Remove unnecessary materials and combustibles from the premises.
- Inform local fire departments of remaining materials that could impede firefighting.
- Inspect facilities regularly or hire a guard service for daily observation.
- Install temporary fencing and or lighting
- Most business insurance policies exclude coverage for vacant buildings or buildings that are vacant greater than a defined period of time. Speak to an ALIGNED Insurance Advocate to have them check your current insurance policy terms and conditions to determine whether or not you have coverage. If not standalone vacant property insurance is available through ALIGNED.