Florida Insurance Network

If you own or manage vacant property, or know someone who does, read this.

Whether it’s residential or commercial, vacant property poses special risks for insurance companies, which – naturally – means reduced coverage for the property owner. The link above provides a concise explanation by way of some great examples. If you’re involved with a vacant property, you really should understand specifically what is and is not covered under your policy and in what amount.

In this economy, you can throw a stone across almost any street in any town and hit a foreclosed home or a vacant storefront. How many owners of these properties understand the insurance implications is anyone’s guess but I’d be willing to bet it’s less than half.

For example, did you know the word “vacant” doesn’t necessarily mean empty?

Clintonesque, (Is is is, or is?) I know, but true. If it’s a single-family home, vacant pretty much means vacant. If it’s a commercial property, like a four-plex or a strip mall, “vacant” doesn’t mean unoccupied. The common definition of “vacant” for insurance purposes is less than 31 percent of the total square footage rented and used for customary purposes.

In other words, a strip mall of 10 units with seven vacancies is considered vacant. The same would be true of an apartment house with seven of 10 apartments unoccupied.

Generally speaking, vacant property is not covered for damages resulting from theft, attempted theft, broken glass, sprinkler leakage, vandalism and water damage over a period of more than 60 days. As for damages resulting from other, covered causes, payment is generally reduced by 15 percent across the board.

Fifteen percent maybe doesn’t sound like enough to send you screaming in a panic to your insurance agent but think about what that really means. Suppose fire burns a significant portion of your vacant strip mall. The cost of repairs is going to run into tens of thousands of dollars and you’re looking at a 15 percent kick in the shorts, in addition to the deductible. For some businesses that’s a make or break scenario, especially in these times of scarce revenue and weak cash flow.

Check your policy and speak to your agent. If you need more help, give me a call. Our agency works with underwriters that do write policies for vacant properties.

Be Sociable, Share!

•