A building that looks occupied to the average person may beconsidered vacant to an insurance carrier—and such vacancies cantrigger a clause in standard policies that limits coverage forunwary building owners and lessees.

Giving some insurance basics for vacant buildings during arecent PC360.com webinar, Christopher Zoidis, vice president of theSpecial Risk Division of wholesaler/MGA Burns & Wilcox, notesthat insurers specifically define vacant property in standard ISO(Insurance Service Office) forms with clauses referring to “lessthan 31 percent of the square footage” being occupied.

For tenants, a building that does not contain “enough businesspersonal property to conduct customary operations” is also “vacant”according to the wording of vacancy clauses in standard policies,Zoidis adds.

If a building is vacant under this definition for a period ofmore than 60 days, then standard ISO forms eliminate coverage forsome key specific perils, he says. According to a recent whitepaper published by Zurich North America, theperils excluded by the vacancy clause are vandalism, building glassbreakage, water damage, theft or attempted theft, and sprinklerleakage. And a penalty kicks in reducing losses paid for coveredperils—like fire and wind—by 15 percent, says Zoidis.

Zoidis notes that vacancy permits, which reinstate coverage forthe excluded perils, have become widely available—from bothstandard and excess-and-surplus lines carriers—over the last fewyears. Some residential property owners can even getreplacement-cost coverage, he says, noting that theactual-cash-value basis of coverage had been the prevailingstandard for vacant property prior to 2010.