Commercial Vacancy Insurance – An Increasingly Competitive Market
In the United States there are over 16.6 million vacant commercial properties, a number that grew significantly after the great recession. For commercial property owners, the semantics behind this growth offers some good news and bad news.
Let’s get the bad news out of the way:
Naturally, the increased amount of vacant commercial space also spawned an increase in its use for illicit, illegal activity. In a recent 2015 building survey, 83% (yes, you read that right) of vacant buildings surveyed in the U.S. showed evidence of illegal use by drug dealers, prostitutes, and property criminals. Fire in vacant commercial buildings has also been on ongoing problem, resulting in over $500 million in damage, annually*.
While the risk exposure to property owners of vacant commercial buildings has increased, the insurance industry continues to provide solutions, becoming ever more competitive and flexible.
That brings us to the good news for commercial property owners:
As claims pertaining to vacant commercial buildings have increased, the insurance industry has further adapted:
Commercial property owners can now secure commercial vacancy insurance for policy terms of 3, 6, 9, or 12 months, with general liability limits of up to $1,000,000 per occurrence and $2,000,000 aggregate. Excess coverage can always be obtained in addition to underlying coverage.
Buildings under renovation are often now insured, as well as bank owned or foreclosed properties.
Policies can be written as packages or as monoline policies
Insurance is available for property limits of just about any size
Independent contractor’s coverage is available
The bottom line:
The growing need for commercial vacancy insurance triggered an increase in the number of companies willing to write it, creating a broader, more competitive market that allows commercial property owners significant advantages in coverage and premium pricing.
When speaking to their respective brokers, commercial property owners procuring vacancy insurance should try to acquire quotes from several different insurance companies and put their policies “out to bid” at the conclusion of each term, even if only a 3 month term.
There are coverage and price advantages to be gained in the current market.
Stay safe, stay healthy,
*Source: Burns & Wilcox