All commercial insurance policies have some type of vacancy clause limitation. These clauses kick in when 70% or more of the building is vacant. If the vacancy clause is applied to a location that has a loss it could mean a reduction in the claim payment by 15% or more or in the case of some carriers, no coverage at all.
If you have a building that is 70% or more vacant, there is an endorsement available that waives the vacancy clause. Your insurance agent must specifically request it from the insurance carrier. The insurance carrier will place conditions on the business on what must be maintained to continue adequate insurance. These may include some or all of the following: maintaining heat, light, power, alarms, sprinkler system, security systems. Some carriers may also request frequent visits by a contracted guard service.
I recently received from a notice and endorsement from a carrier changing how they will handle vacant property on a go-forward basis. I found this form and noticed a few interesting items:
- There is no coverage for the property after the 60th day if you do not notify the carrier.
- If you do notify the carrier, they still reserve the right to cancel that location / building from the policy and provide a return premium.
- Coverage can continue if acceptable underwriting requirements are maintained including fire protection, watch, and alarm services
Bottom line, in this tough economic market with increased vacancies, make sure you and your agent are communicating to ensure a comprehensive and complete insurance program. Wisconsin business interested in more information on property insurance or confirmation that their business insurance is comprehensive, contact Knowledgebroker Scott Brookes.
