What is vacant property insurance?
Vacant property insurance for small businesses is designed to protect commercial properties such as retail stores, restaurants, warehouses, offices, land, and other business workplaces from financial losses or damages that occur while they are unoccupied or vacant for an extended period.
Who needs vacant property insurance?
Any commercial property owner whose building is vacant needs a vacant property insurance policy. That’s because your existing commercial property insurance may exclude coverage for vacant business property, exposing a gap that leaves you at risk. A vacant property policy fills that gap by providing protection from liabilities like if someone is injured on your vacant property and sues you for bodily injury.
There may be several reasons a business or residential property is left vacant, such as:
- If you have shut down your place of business because of a government-ordered public health mandate and you and your employees are working remotely
- If you own the commercial or residential property and are selling it
- If you own the commercial or residential property but it is vacant while you find a tenant for it
- If you are filing for bankruptcy and the business is closed to the public
- If there is construction taking place or the property is uninhabitable
Some insurance companies may consider your commercial space as vacant after only four days, others may consider it vacant after 30 days. It’s important to check your policy details to determine the length of time your insurer considers a property to be unoccupied.
What does it cover?
A comprehensive vacant property and building policy for businesses may include the following types of coverages:
- Commercial General Liability (CGL) Insurance: CGL is a type of insurance that protects your property from third-party damage or bodily injury. It is one of the most common coverages small business owners purchase. For instance, if you are sued for bodily injury damages by a third party because of a slip-and-fall accident, CGL may cover the injured person’s medical expenses and your legal fees regardless of the outcome of the lawsuit. Even if you are not sued by someone who gets injured on your property, CGL coverage may cover the injured person’s medical expenses.
- Commercial Property Insurance: Commercial property insurance is designed to protect your commercial space and its contents from unexpected events such as damage or loss because of fire, windstorms, theft, or vandalism. This type of policy insures your building, its contents and inventory, furniture, and any electronic devices or office equipment on the premises.
- Equipment Breakdown Insurance: If you have valuable equipment or machinery at your property, it’s worthwhile to protect it from damage or loss. Equipment breakdown insurance, also known as boiler and machinery coverage, is designed to repair or replace your equipment if it malfunctions, or if it is damaged by fire, flood, or severe weather.
- Builder’s Risk Insurance: If your vacant commercial property is undergoing construction or renovations, you may need to add builder’s risk insurance to your policy, which is also referred to as ‘vacant with renovations’ insurance. It protects you from the start to the end of a construction or renovation project, including coverage for the building, the construction materials and equipment on-site, and any damages which occur during construction such as fire, theft, or vandalism.
How much does vacant property insurance cost?
The cost of an annual premium for vacant property insurance depends on several factors, such as:
- The location of your property, its size, and the condition and age of the building or structure
- How long the property is vacant for or expected to be vacant
- The reason for the vacancy
- How long you have owned the vacant commercial or residential property and any other property
- Previous insurance claims
- Your annual and projected revenue
- The types of coverages you choose and the coverage limits of your policy
Speak to a Zensurance licensed broker to determine what risks your vacant property is exposed to and get their insights on the right level of coverage to ensure you’re adequately protected.
How can I reduce vacant property risks?
The first step to reducing the risks you face is to purchase a vacant property insurance policy. Beyond that, there are preventative measures you can take to protect your property while it is unoccupied, including:
- Remove all valuable equipment and inventory and store them in a secured location
- Secure all exterior doorways and windows
- Hire a contractor to erect temporary fencing around the property
- Install a 24/7 alarm monitoring system that includes surveillance cameras and fire and flood detectors
- Shut off water to the building while it is unoccupied
- Inspect the unoccupied property every 36 to 48 hours and look for damages or things that may require repair. Keep a record of each visit and what actions you took while inspecting the property
- Hire a security company to monitor and visit the property regularly
- Install exterior motion sensor lighting and set interior lights on a timer so it appears someone may be inside
- Ensure you have a snow removal contractor remove snow and ice on the property
- Inform your insurance broker if the property is vacant or expected to be vacant
Common claims scenarios
Frequently asked questions