Vacant Property Insurance

Like most things worth doing, owning property comes with both responsibility and risk, especially if you own a vacant property. Vacant buildings can pose serious liabilities to the building owner, landlord, and/or property manager because they are far more susceptible to catastrophic loss due to instances such as vandalism, fire, building decay following undetected repairs, etc. If you own vacant property, investing in vacant property insurance to protect you against financial loss is a wise decision, and depending on where your property is located, it may be required by the local municipality. Also known as vacant building insurance or vacant dwelling insurance, vacant property insurance offers coverage against a number of common claims:

Risks 

The following are the most common claims on vacant properties:

• Fire
• Smoke
• Lightning damage
• Windstorm or hail damage
• Riot or civil commotion damage
• Vandalism (as no one is present to deter vandals)
• Presence of squatters on the property causing damage without owner knowledge

Should any of these risks become very real problems for you as an owner/landlord, vacant property insurance will provide guaranteed financial protection and cover the cost of repairs. In addition to purchasing coverage for a vacant building, consider taking the following actions:

• Regularly inspect the building for damage or threats of damage
• Seal off windows and letterboxes
• Install alarm systems that detect intruders, fires, or floods

Insurance Solutions 

Depending on the type of vacant property you have, various solutions are available.  Some of the key factors in determining the right kind of vacant property insurance are shown below.  When shopping for insurance on a vacant property, being prepared with answers to these questions will help your insurance agent find the right policy for you:

• How long has the property been vacant (many insurance carriers have eligibility guidelines around how long a property has been vacant)
• What type of property is it (commercial building, single family home, apartment building, etc…)
• What are your plans for the property (i.e. renovate, sell, rent, etc…)
• If you plan to renovate, provide a basic summary, including estimated length of project, cost, and scope of work.  Depending on the scope of the project, you may be better off with a Builders Risk policy, which provides more tailored coverage for active construction projects.

Cost 

A typical vacant property insurance policy is one and a half to three times the cost of a standard property insurance policy due to the increased risks associated with owning an uninhabited building. If your occupied property becomes vacant, it is important to notify your insurance agent immediately. If you fail to provide adequate notice (adequate notice varies by policy, generally ranging from 30-60 days) and you suffer a significant loss, coverage may be denied and you will find yourself stuck paying for damages out of pocket .  Don’t let an unforeseen accident on a vacant property leave you paying for damages out of pocket.  Vacant property insurance can provide you with the necessary protection. Contact us today for more details on your coverage options.

This Coverage Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2013 Zywave, Inc. All rights reserved.