Vacant Building Insurance

What Does Vacant Building Insurance Mean?

Vacant building insurance is a type of policy that covers a vacant (or unoccupied) residential or commercial building. It can be purchased by commercial clients, such as landlords or investment fund corporations, or by individuals who buy houses that will temporarily be without residents.

Insured buildings may remain vacant for various reasons. Commercial properties could be newly constructed or between tenants, while residential properties might be a house purchased from probate after the previous owner has passed away. Landlords with rental units sitting empty between tenants often switch back to a commercial landlord insurance policy once a new tenant moves in, since standard landlord policies generally exclude long vacancies.

Insuranceopedia Explains Vacant Building Insurance

A vacant building represents a higher risk compared to occupied buildings, so coverage is often limited to “catastrophe” perils, such as fire, lightning, aircraft, and explosion.

These policies often include conditions that must be met to maintain coverage and file a claim in the event of a loss. For example, the property may need to be inspected every seven days or have its letterboxes sealed. These precautions are designed to prevent losses from vandalism, which is a significant risk for clearly unoccupied buildings.

The coverage typically includes property owners’ liability insurance, which is crucial since owners of vacant buildings can be sued even if trespassers sustain injuries on the property. Premiums for vacant building policies are generally higher than a standard property policy because of the elevated risk profile, and a similar dynamic affects commercial property landlord insurance pricing when a property is partially leased or in transition.