Getting to Know Vacant Structure Insurance

When property lies vacant, not only is it vulnerable to the same risks that face any other property — such as fires, floods and earthquakes — but it may be more vulnerable to theft and vandalism, due to the absence of potential witnesses. If clients own commercial or residential property that is currently or may soon be vacant, consider offering insurance for the structure to protect against unexpected financial losses and claims.

1. What is vacant structure insurance?

Vacant property insurance is designed to protect residential and commercial structures that are completely vacant and could be undergoing minor remodeling or renovations. Some policies for vacant residential properties may also protect the owners’ personal property stored on site, under certain conditions.

For the purposes of this type of insurance, residential property is typically defined as a single-family home, mobile home or a one-to-four-family-unit property. An apartment building with more than four units will generally be considered a commercial structure. Insurers’ definitions may vary, so it is important for insureds to check their policies to make sure their properties are classified appropriately.

2. Who should consider buying coverage for vacant property?

Any type of property owner can purchase this type of insurance. Common policyholders include:

• Individual property owners

• Estate executors or trustees

• Commercial property owners, including sole proprietors, corporations, limited liability companies and partnerships
  

It is important to properly identify how the property is owned on the application for coverage. However, the form of ownership should not impact the policy premium in any way.

3. When should people consider buying insurance for vacant structures?

Any time a property is vacant, the risk of loss goes up, simply because nobody is there watching it on a regular basis. People purchase vacant property coverage for a variety of different reasons.

Landlords who haven’t been able to find tenants may need vacant structure insurance while the property is between tenants. Similarly, individual property owners who have moved out of their homes and intend to either rent out the property or sell it may need this short-term insurance protection.

House flippers or owners of completed new construction properties in the process of being sold should have coverage, as should estate executors, administrators or trustees working on selling property on behalf of another individual.

4. Why buy vacant structure insurance?

Many property owners mistakenly assume that their homeowners or other permanent insurance policies will cover their properties regardless of occupancy status. However, most permanent policies include clauses that limit or completely eliminate coverage for property that has been vacant for a certain number of days, as specified in the policy.

The most common reason for an insurance claim on a vacant structure is vandalism. When a commercial building or home is unoccupied, it presents an attractive target for vandals. The results can be devastating and costly.

Other common reasons for claims against vacant property insurance include:

• Fire and smoke damage

• Losses due to lightning strikes

• Water damage, which can be extensive in vacant properties where it can go unnoticed for a long period of time

• Personal injury, if a visitor to the property is physically hurt due to conditions on the property

• Windstorm and hail damage

• Sprinkler leakage – as with other types of water damage, a leaking sprinkler system may not be noticed right away in a vacant structure, which can lead to greater / more costly losses

• Theft of the owner’s personal property in a residential structure, or theft of fixtures – these types of claims are typically not automatically covered, though they may be available in some cases through additional coverages

Depending on the provider, coverage for these perils may be offered under different form types or endorsements.

5. Where is vacant structure coverage available?

Generally speaking, this type of insurance coverage is available anywhere in the continental United States, but providers may require a certain proximity to a staffed fire department.

6. How can a property owner obtain coverage for a vacant structure?

World Events Insurance can help property owners obtain coverage. Call us Today! 888-389-3900 or email me at a.grigsby@worldeventsinsurance.com

*Source: US Assure