Vacant Commercial Property Insurance Explained in Detail

Vacant commercial properties can be a magnet for vandals, squatters, and other unwanted visitors. This is why vacant commercial property insurance is a must-have for property owners.

Vacant commercial property insurance is specifically designed to address the unique risks associated with empty buildings. These policies can help protect against damage, theft, and liability.

The cost of vacant commercial property insurance can vary depending on several factors, including the location, size, and type of property, as well as the level of coverage desired.

Vacant commercial building insurance protects the physical structure from potential hazards like fire, vandalism, theft, and extreme weather-related harms.

This type of insurance also shields the property owner from liability for property damage or physical injury to third parties.

Vacant building insurance can include coverage extensions for specific issues that apply to your commercial building.

The cost of insurance on a commercial building depends on factors like the size of the property, its value, and its current use.

If the commercial building is vacant, the insurance is likely to be more expensive due to the greater risk involved.

Damage to a vacant building can be compounded if it isn't discovered immediately, and more types of damage can happen.

ALIGNED insurance advocates can provide a quote tailored to your commercial building, taking into account its unique exposures and hazards.

A commercial building is considered vacant unless 31 percent of the total square footage of the building is occupied and being used for its intended purpose.

This means that if you own a retail strip mall and less than 31 percent of your space is occupied by actual retailers, your building is considered vacant.

Even if you're actively seeking new tenants, your building is still considered vacant if the occupancy rate falls below 31 percent.

In other words, a commercial building is considered vacant even if it's not abandoned or neglected, but rather if it's not being used for its intended purpose.

This is a key factor to consider when it comes to commercial property insurance, as vacant buildings are often a draw for accidents, vandalism, and theft.

Commercial property insurance has limits, especially when it comes to vacancy. A standard policy will cease coverage for water damage, theft, sprinkler leakage, and vandalism after 60 days of your building being vacant.

Fires in vacant commercial buildings have resulted in over $500 million in direct property damage per year, highlighting the increased risk of fire when a building is empty.

You might need vacant building insurance if your building is considered vacant, which is typically defined as when 70 percent of the total square footage is not being used by you or your tenants.

Vacant commercial properties face a significant amount of risk due to the lack of human presence. Fires in vacant commercial buildings result in over $500 million in direct property damage per year.

Problems can quickly escalate when no one is there to address them, such as a sprinkler leak causing significant water damage over time.

Theft and vandalism are also major concerns, as there's no one to keep an eye on the property.

If you own a commercial building, once 70 percent of the total square footage is not being used, it's considered vacant, and you'll need vacant building insurance.

Some common target classes for vacant commercial property insurance include newly vacant, residential, commercial/industrial, and vacant with planned demolition.

Know the limits of your commercial property insurance. A standard policy will cease coverage for water damage, theft, sprinkler leakage, and vandalism after 60 days of your building being vacant.

A loss occurring while a building is vacant can result in reduced payment by as much as 15 percent. This reduction is a significant consideration when planning for the right insurance during a vacancy.

Understanding these limitations can help you plan for the right insurance during a vacancy.

Insurance costs for a vacant commercial building can be higher due to the increased risk of damage and liability. This is because there's no one on-site to monitor potential issues.

The cost of insurance depends on factors such as the size and value of the property, its age and condition, and whether it has had previous claims. Vacant buildings are more expensive to insure because of the added risk.

Pipes can burst and cause extensive water damage if left unchecked, especially in colder months. This is one of the potential hazards that vacant building insurance can protect against.

The policy can also cover liability for property damage or physical injury to third parties. This includes protection from fire, vandalism, theft, extreme weather-related harms, and accidental damage.

Insurance costs can be compounded if damage occurs and isn't discovered immediately. This is why it's essential to have a policy that covers a variety of risks.

ALIGNED insurance advocates can provide a quote tailored to your commercial building's unique needs. They work with insurers who have capacity available in excess of $20 million.

Vacant commercial properties have unique exposures that can increase the risk of damage and loss. Water damage may go unchecked if no one's around to see pools of water or smell mildew.

Squatters may take over vacant buildings, causing intentional or unintentional damage. For example, an apartment building was deemed unsafe after squatters trashed it.

Vandals and thieves may target vacant buildings, stealing valuable materials like metal from air conditioning units or breaking windows and causing graffiti. Thieves may also steal other valuable items.

Fire is a significant concern for vacant buildings, as squatters may set fires unintentionally while cooking or using fire to stay warm. Arson is also a risk, and Seattle has seen a surge in fires at vacant buildings, increasing from 77 in 2021 to 130 in 2023.

These exposures highlight the importance of considering unique risks when insuring vacant commercial properties. Insurers may limit or restrict coverage for vacant buildings due to these increased exposures.