Robinsons Insurance Agency Blog
A building is considered vacant unless at least 31% of its total square footage is rented to a lessee or sub-lessee. Vacant buildings are unoccupied properties for extended period of time making them more vulnerable to trespassing, theft, vandalism, fire, and other damages like water damage, glass breakage, electrical explosion, sprinkler leakage, and mold.
As per The National Fire Protection Association, in 2011-2015, U.S. fire departments responded to an estimated average of 30,200 structure fires per year in vacant properties. These fires resulted in an average of 60 civilian deaths, 160 civilian injuries, and $710 million in direct property damage per year. Because of this, in insurance perspective, a vacant building is a high risk compared to occupied dwelling.
Building: The limit set to replace or repair the property on a covered cause of loss. Most of the time, insurance company will insure a vacant building at an ACH or actual cash value, which is the Replacement Cost less the depreciation cost. The insurance company will provide coverage for direct physical loss, including fire, theft, vandalism and water damage, among other coverages.
Liability: The coverage provided to the business with protection against claims resulting from injuries to third parties and damage to other people's properties. Liability will cover defense cost, medical expenses of the injured third-party, settlement, judgement, attorney fees and other legal costs.
Mechanical Breakdown: The coverage for a loss or damage to hot water boilers & steam equipment, steam explosion of boilers, piping, engines & turbines. It is an important coverage to businesses like restaurants as it covers perishable goods spoilage and refrigeration contamination.
The common underwriting requirement to be able to bind Vacant Building Policy are the following:
Being aware of the vacancy provision in the property policy can help reduce the potential likelihood of litigation and losses. This is why it may be essential to take the following steps:
Noncompliance with the requirements, at any time during the policy period, renders this insurance null and void.
Vacant Building Insurance Quote