If you own vacant property, whether it’s a private home or a commercial building, you know it’s an asset that comes with many hazards – and a lot of stress.
For example, take a commercial property owner whose vacant building gets vandalized by metal thieves who strip the entire place of pipework and any other metal they can sell for scrap. Or the homeowner who gets blindsided by a hefty liability claim made by a person who was injured on the homeowner’s property, even though the claimant was an illegal trespasser who was causing damage to the property. Either of these situations could result in a serious financial setback.
Vacant properties can be prime targets for trespassers, thieves, and vandals. They’re also especially susceptible to fires. According to the most recent data from the National Fire Protection Association (NFPA), between 2011 and 2015 there were more than 30,000 structure fires in vacant buildings, resulting in an average of 60 civilian deaths, 160 civilian injuries, and more than $700 million in direct property damage every year.
Vacant properties are also susceptible to other hazards such as water leaks, electrical explosions, wind, hail, and mold. So, there’s no shortage of risks that could quickly turn your asset into a costly liability.
Avoid these three big mistakes with your vacant property:
- Failing to understand the definitions. Knowing the difference between “vacant” and “unoccupied” can mean the difference between a claim being covered and incurring a significant financial loss. Generally, your property is considered “unoccupied” if it still contains items and possessions as if you plan to return. For a home, that means sufficient items such as cooking utensils, functioning appliances, and basic furniture. Your property is considered “vacant” if it’s entirely empty, with no personal property inside. A commercial property is considered vacant if its contents have been removed and it’s unoccupied for 30 days or more.
- Not getting the right insurance. Don’t expect your standard homeowners’ or commercial property policy to cover you in a claim. These policies generally have exclusions for losses on a property that’s been vacant for 60 days or more (30 days with some companies and policies). You need special vacant property or unoccupied property coverage, which you can get either as an endorsement or as a separate policy. Shop around, and secure coverage as soon as you find out your property is going to be vacant.
- Not practicing good risk management. Take measures such as installing a multifunctional alarm system, renting out your home, or finding a house-sitter. For unoccupied commercial property, make sure heating, plumbing, and electrical systems are secure, and the property is free from significant hazards such as broken windows and combustible materials. And don’t forget – communication is good risk management. Communicate regularly with your insurance provider to get the right coverage for your needs and keep them up to date on any changes so you can continue to be protected.
At BNC Insurance, we understand how important it is to protect your property investment for the future. Our vacant and unoccupied property coverage will give you peace of mind knowing your investment is protected from a potentially costly liability trap.