Your insurance limits coverage on buildings and locations that are vacant. For example, under most property insurance policies, a vacant building is valued at actual cash value rather than replacement cost – meaning your loss payment is reduced by depreciation.
First, what does “vacant” mean?
If you are a tenant vacant means a location that does not contain enough business personal property to conduct customary operations.
If you own the building vacant means less than 31% of the square footage is rented or used by the building owner for customary operations.
Buildings under renovation are not considered vacant.
Now, what are the issues with vacancy?
I already mentioned the issue of valuation. Subtracting depreciation can mean your loss payment is reduced by 20% or more. You probably have no coverage for a loss by vandalism, glass breakage, burst pipes or theft if the location has been vacant for 60 days.
If you have a vacant location talk with your agent about your coverage. In many cases, the underwriter will soften the vacancy provisions if you agree to have the site visited on some schedule or if you maintain an alarm system at the location.
