In today’s unsettled economic environment, it is not unusual for a commercial building to sit vacant for an extended period of time. If you own a building in this situation, you should immediately call your insurance broker and discuss how your insurance policy would respond in the event of an insured loss.
Most insurance policies contain a “vacancy clause”, which severely limits coverage on a building. For insurance purposes, a building is generally considered vacant when it has been unoccupied for a period of 60 consecutive days. Once a building has met this 60 day standard, the policy’s vacancy clause is automatically triggered. The vacancy clause removes coverage occurring from the following perils: vandalism, water damage, theft, glass breakage, and sprinkler leakage. Additionally, most insurance policies will reduce the claim amount of other losses, such as fire, wind, etc. by a 15% penalty.
Fortunately, some insurance carriers recognize that the current economy is resulting in more buildings being vacant, than in the past. Some are offering broader coverage for their policyholders than previously. However, the only way to know for sure is by contacting your insurance broker and discussing your situation.
The best strategy to protect your building is to discuss the situation with your San Diego insurance professional, and see how your policy would respond.
