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Unoccupied vs. Vacant: Is Your Building Really Empty?

Unoccupied vs. Vacant: Is Your Building Really Empty?

As the economy continues to struggle, property managers and property owners may find themselves with an insurance dilemma on their hands when tenants move out. Is my building vacant, or is it unoccupied? What does that mean if I have a claim? Is there a difference? When it comes to insurance, yes, there is a difference. You and your insurance carrier likely do not define these terms in the same way, so it is important to know the difference. Unoccupied Doesn’t Mean Empty Insurance companies define unoccupied buildings or spaces as owned, rented or leased units that contain contents but no people occupy them on a regular basis. This can refer to a second or vacation home or a secondary office space. If a building becomes unoccupied and stays that way for more than 90 days, the property insurance coverage in place on the property may be reduced. The amount of coverage and the perils insured against may both be affected, and changes are dependent on the policy term and conditions. The Building Can Be Vacant Even With Tenants According to the Insurance Services Office (ISO) Building and Personal Property Coverage Form (CP 00 01 04 02), vacancy is defined in one or more of these ways: A rented or leased building or unit is considered vacant when it does not contain enough personal property to conduct customary business operations. An owned building is considered vacant when less than 31% of the total gross building square footage is not rented or leased to a tenant and used for customary business operations or used by the building owner to conduct...