During these trying economic times we see the number of foreclosures on homes and businesses reaching a record high, and thus more and more properties are now vacant. Vacant buildings pose an insurance liability known as an “attractive nuisance”. Vacant properties are more prone to arson, theft of copper plumbing, vandals and water damage.
Although most insurance policies contain a vacancy provision, a Massachusetts homeowner’s policy does have a vacancy exclusion that typically applies after a home has been empty for 30 to 60 days when the policy starts removing coverage. After 30 days time, the vandalism coverage is removed, and after 60 days time the coverage for fire damage ceases. Additionally, coverage for frozen pipes, heating or air conditioning systems will be voided unless the structure has sufficient heat and/or the water system has been shut off and drained.
In the case of a private residence, insurance companies have a distinction between vacant and unoccupied. In an unoccupied home the furnishings are there although the resident is living elsewhere. A home is only considered vacant when the resident has moved out and taken their belongings with them.
If the property is a commercial building, vacancy is defined in terms of the entire building. Some policies state that a building is considered vacant, unless at least 31% of the total square footage is being used to conduct customary operations. In simpler terms, if only one floor of a four story building is being used, the vacancy restrictions of the policy would apply. Under a standard Massachusetts commercial property policy if a building is vacant more than 60 days no coverage will be provided for vandalism, sprinkler leakage, water damage, theft, or attempted theft. In the case of other types of losses, payment will be reduced by 15%. In Massachusetts most policies have a 30 day vacancy clause.
If your home or commercial property is vacant there are some steps you can take to protect your property. Most importantly, the property should not appear vacant. Be sure to maintain the premises just as you would if you were still occupying the property. Make regular visits to check in on the premises, mow the lawn, pick up the mail, and leave on lights. If the property is a residence (aka a dwelling) consider leaving some furniture in the dwelling so as to avoid the property being classified as vacant and thereby losing valuable coverage.
Both Massachusetts homeowner’s policies and Massachusetts commercial insurance policies are not designed to protect vacant buildings. Rather, these vacant properties require a special type of policy that will cover fire and wind damage but not theft, vandalism or water damage. It is important to discuss your options with your insurance agent to determine the best coverage for your needs. For more information regarding coverage on your vacant or unoccupied properties call your local independent insurance agent today.