When businesses close their doors temporarily or permanently, it impacts their property insurance coverage.
Many commercial property policies have a “vacancy clause” which reduces and may even deny coverage for things like water damage, theft, and vandalism - if a property were deemed to be vacant. On the other hand, properties that are considered “unoccupied” are better protected.
So how do you keep your property from being classified as vacant?
- Check your policy to see if there are specific definitions for vacant vs unoccupied.
- Actively maintain your property. Avoid shutting off heat. Periodically test fire alarms and sprinkler systems. While these measures may cost more, they have the added benefit of greatly reducing the risk of building damage.
- Notify your insurance broker if your property is no longer being occupied and ask what actions you need to take to protect your property.
Most importantly, make sure you have an insurance broker who can proactively advise you on how to manage risks.
