Bob - Walt, what do you have for us today?
Walt - Bob, good morning, we have talked about the building vacancy in this market and I want to talk about vacancy today, but how it affects building insurance.
Bob - This sounds like one of those issues that is not exciting talk about, but probably very important.
Walt - Absolutely, commercial property owners must understand the vacancy provisions in their insurance policy in order to properly insure the building.
In the insurance language a building is considered vacant unless at least 31% of its total square footage is rented to a tenant to conduct its customary operations and or used by property owners to conduct customary operations.
So the building does not have to be totally vacant, Bob think about this, if you own a 12 tenant strip mall with a grocery store, if they grocery vacates the building, even though all the other tenants are still occupying the property, and less than 31% is occupied by the remaining tenants, it can still cause a problem with the vacancy clause in the insurance policy. It is important for property owners not to assume that they are covered if they have vacancy.
Bob - Copper theft has become a serious issue, is copper theft or vandalism covered is the building is vacant?
Walt - This is another area where it is important for property owners not to assume that they have coverage.
If a building is vacant for more than 60 consecutive days before the loss occurs, there is no coverage for loss caused by the following: vandalism, glass breakage, theft and water damage.
If the property has for example a fire, the amount that would otherwise have been paid for loss or damage is reduced by at least 15%. The insurance policy is a complicated document and should be understood by the policyholder. It is crucial not to assume that you are covered unless the policy says you are.
Bob - Walt, what are some solutions for property owners to make sure that they are covered and have the proper insurance?
Walt - Bob it is essential to take the following steps: first of all notify your insurance company about the vacancy so proper coverage can continue under the policy. Next, review the policy terms and conditions regarding vacancy. Check with your carrier to determine whether that vacancy position applies in your policy. Finally, consider a property insurance endorsement that will help with vacant building coverage. Although this will carry an additional premium, it could be well worth it.
Copper theft is currently the greatest concern in a vacant building. The crucial aspect is to not assume if a building is vacant or partially vacant that the copper theft will be covered. Pull out the policy, read the vacancy clause and understand what is and is not covered, and then call your insurance agent to get the coverage you need.
Bob - Walt how can people contact you today to talk about commercial real estate?
Walt - Thanks Bob, Walt Arnold with Sperry Van Ness, 256-1255, website waltarnold.com.