Vacant Property Insurance

In these tough economic times insured’s would be prudent to review all properties that they have property insurance on. The two most important words to pay attention to in your insurance contract are occupancy and vacancy. These provisions usually affect the property insurance for your buildings and contents that you have insurance on but they can also play a part in your general liability insurance program also.

Most insurance policies clearly define what they mean by vacant or occupied. Reading and understanding these definitions can be tantamount for you as the insured in knowing whether or not you’re going to have coverage if a claim should occur. Usually insurance companies are not as concerned with the building being unoccupied as they are with the building being vacant. The insurance companies understand that from time to time buildings can be unoccupied as new tenets come and go. Or there might be some remodeling issues that need to be addressed and the building could be unoccupied for a period of time. Knowing what the limit of time for a building to be unoccupied is the number you should know. You probably can break that string of being unoccupied simply by just occupying the building for a short third time and the meter will be reset and start counting again. Most insurance policies have a 3 to 6 month unoccupied clause in their contracts. The building remains unoccupied for the specified period of time the policy can be rendered null and void come claim time.

A building being vacant, meaning usually having nothing in the building except for the four walls usually has a shorter timeframe. That is usually 90 days in most property policies. The risk management tip of the day is that you as insured should read the occupancy and vacancy clauses in your property insurance contracts. Also, sometimes in your general liability policies there can be occupancy and vacancy clauses built into the warranties so that the general liability policy may not respond if you exceed the occupancy and vacancy clauses. When you got to market for proposals, besides comparing prices and coverages, it would behoove you to also compare what occupancy and vacancy clauses are built in to the respective insurance carriers contracts. If you typically experience longer periods of unoccupied and/or vacant buildings, an insurance policy that might be cheap in price but restrictive in these clauses might not be in your best interest in the long run. As the insured, being knowledgeable about these clauses can help you in your insurance decision-making process.