Do you own a commercial property that has been unoccupied for a while? Whether it’s because it’s out in the market for sale or lease, you’re renovating, or your business has just recently closed, it’s not advisable to rely solely on your current insurance. Additionally, standard commercial property insurance or business insurance may not provide the same coverage as unoccupied commercial property insurance.
Owning a commercial property is one of the biggest investments you can ever have, which is why you should do the best you can to protect it. One option is to consider purchasing unoccupied commercial property insurance.
Meanwhile, if you’re not yet familiar with the unoccupied commercial property insurance, we’ll discuss everything you need to know about it.
What Is Unoccupied Commercial Property Insurance?
Unoccupied commercial property insurance is one of the best ways to protect your vacant property. Since the property isn’t actively used, it comes with various risks, such as theft, fire, vandalism, water damage, and liability if there has been an accident on the premises.
A commercial property is considered unoccupied if it hasn’t been used for around 30 to 60 consecutive days. If you have a standard commercial property insurance, it’s more likely to cover the property once it’s considered unoccupied.
If you’re working with an insurance adviser or broker, you can consult about your current situation, but ensure to do it as early as possible to avoid any financial losses.
Why Unoccupied Properties Are Considered Higher Risk
As mentioned, although some risks of having unoccupied properties can be similar to when the commercial property is still occupied, such as vandalism, fire, and theft, the level of risk can be different. For instance, if the commercial property often has people around, like if it’s a store or an office, vandals and thieves have a lower chance of being able to roam around.
On the other hand, if the commercial property is unoccupied, strangers can freely roam around the property whenever they like, especially if there’s no security guard present. Aside from people, accidents can happen that may go unnoticed for a long time, which can lead to significant damage. For instance, if a pipe bursts and no one is around, it may take a week before someone notices it, which can be an additional cost.
What Does It Cover?
The coverage for the unoccupied commercial property varies depending on the insurance provider, but some of the most common ones include theft and vandalism, fire, storm and flood damage, liability insurance (for third-party accidents), and legal expenses.
Of course, you can also customise your coverage depending on your needs. In addition, you can consult with your insurance adviser or broker for risk assessment and other essential things you need for this new type of commercial insurance.
If there are things you haven’t understood yet, like whether you just need to upgrade your policy or get another one, you should discuss it with your insurance broker or adviser.
Why You Shouldn’t Skip It
As mentioned, availing of the unoccupied commercial property insurance can significantly protect your property. If it becomes unoccupied for a long time, the risks of keeping it around can improve, which is why you should invest in the said insurance. Over time, the property might deteriorate on its own, but you should still ensure that it has proper maintenance, so that the financial needs of the property can still be supported by the unoccupied commercial property insurance.
Another thing you should keep in mind is that having an unoccupied commercial property insurance is to ensure that you meet the lease or mortgage requirements, which is usually what the lenders and landlords ask.
Lastly, without an active business operation, it can be hard to fund additional repairs or legal fees, so keeping the unoccupied commercial property insured is a good way to go.
Other Tips for Protecting Your Unoccupied Property
While having an unoccupied commercial property insurance serves a huge role in managing risks, there are other things you can do to protect your property. Some of these include:
- Maintaining utilities running- there should still be lighting or water in the area, so that the maintenance won’t become a hassle.
- Performing regular inspection- just like a busy commercial space, an unoccupied space should also be inspected for potential issues.
- Keep the property clean- aside from the regular maintenance, the light cleaning should also be done regularly.
- Inform your insurance provider- the moment the property becomes unoccupied, you should inform your insurance provider, insurance adviser, or broker to make the necessary changes in the policy and coverage.
Final Thoughts
Whether you’re still unsure how long the commercial property will be unoccupied, securing the right insurance can significantly help you financially. Don’t forget to check your business insurance to see if it’s possible to add related coverages that can improve the security of your unoccupied commercial property.
