"Vacant Property" Are You Really Insured?

With today’s trying economic times there are more and more businesses closing their doors and vacating their premises. For a property owner the loss of tenants not only impacts your revenue stream but it can have a significant impact on your insurance coverage. You should know that provisions in your policy address "vacant" building conditions and there are specific losses that may not be covered in the event of a loss and other losses may be paid but at a reduced amount due to "vacant" conditions.

As a property owner the issue is time. Most policies consider the property "vacant" after 60 consecutive days where the property has 70% or more of its square footage not rented or it is "unoccupied" and not being used to conduct customary operations that it is designed for. In most policies when the property is considered "vacant" there is no coverage for six causes of loss which can be summed up into two categories. These are: Water-related Damage and People Perils such as vandalism, theft, attempted theft, and glass breakage.

Other causes of loss such as Fire may be covered, but any payment that would otherwise have been made is reduced by 15%. So for example, a fire in a building that has been vacant for more than 60 days would result in a payment of only 85% of the loss sustained instead of the 100% if the building had been occupied. This could result in significant out of pocket expenses to be paid by you the owner. For a $1,000,000 building this would result in a $150,000 of unbudgeted expense that comes right off your bottom line.

In order to protect yourself there are policies which are specifically designed for "vacant" properties. These policies are intended to provide full coverage in the event of a loss and can be purchased on a short term period as needed. Most are available as 3 month policies but many times coverage can be extended up to a year.

source: www.ezinearticles.com