Like so many other sectors of the economy, the commercial real estate market has hit since the COVID pandemic began more than a year ago. Between the widespread closures in the retail trade and millions more people working from home, the demand for space has fallen and left more vacant properties than ever before. They do not generate income. They can be a nightmare for safety and maintenance. And they are a higher risk for insurance companies. According to the National Fire Protection Association, 31,000 structural fires in vacant buildings are estimated each year, resulting in an average of 50 civilian deaths, 141 civilian injuries and $ 642 million in direct property damage. That risk alone is sufficient to make all insurers think twice about writing a policy.
But insuring your vacant property is not impossible. Here are five things you need to know.
- Understand the leave clause in your commercial property policy . A typical exception in a commercial property policy states that coverage will cease if the property has been vacant for more than 30 days. The property is considered "vacant" if less than 31 percent of its total square meters is rented or leased and used by the tenant to carry out his usual business or used by the building owner to carry out usual business. If the property is vacant for more than 60 consecutive days before a loss or damage occurs, there is no coverage for vandalism, sprinkler leakage (with exceptions), broken glass, water damage, theft or attempted theft. For other types of covered claims such as fire or wind, all amounts payable would be reduced by 15 percent. Keep in mind – your policy language may differ. It is crucial to know what your own policy says.
- Secure coverage for excluded items . You can add a vacancy approval to your commercial property policy, which restores coverage for the losses mentioned above. This recommendation is intended for when the hazards normally associated with vacancy are present, but the insurer has chosen to take out the exposure. If your property will be vacant for an extended period of time, your insurance company can help you choose the right coverage to protect the property. And do not forget to discuss business income insurance with your agent, as it will be more difficult to obtain.
- Keep an eye on your insurance agent about the living conditions in your property. If your property becomes vacant, the risk of loss increases significantly and requires different coverage. But t market is competitive and your operator may be able to offer you options such as more coverage or lower prices as well as b road form or all-inclusive policy. Most carriers also offer policies for either three or six months for a maximum of 18 to 24
- Arrange security monitoring of the property at least every 72 hours. Vandalism is one of the main risks with vacant property, so this will go a long way to reassuring your insurance agent. protect renovations and rebuild projects.
The COVID pandemic has been a unique event in its global reach, and its impact on the commercial real estate market can be far-reaching and long-lasting. For commercial property owners and managers dealing with vacant properties, it is important to keep in touch with your insurance provider to be safe.
Do you have questions about insuring your vacant commercial property? Call us at BNC Agency today.