Questions regarding coverage for vacant buildings come up frequently in the FC&S “Ask the Experts” queue. The following examples illustrate two different outcomes regarding multiple buildings insured under one policy.

In the first scenario, an insured had one policy—a Building and Personal Property Coverage Form (CP 00 10 10 90)—insuring 10 different structures and buildings. Building 1 was occupied as a warehouse and office and at one time housed cold storage. The cold storage, previously occupied by a third party, had been vacant for a few years when it suffered its third vandalism and its conditioning compressors were stolen.

Because Building 1 housed various separate occupations, should the vacancy clause apply to property that once serviced the now-vacant cold storage?

Newer editions of the CP 00 10 form state, for policies issued to the owner or general lessee of a building, that “building” means the entire building and that the building is vacant unless at least 31 percent of its total square footage is rented and used to conduct customary operations or used by the building owner to conduct customary operations.

The 10 90 edition does not include this breakdown; it just states that a building is vacant when it does not contain enough business personal property to conduct customary operations. If all of these occupancies are in the same building and only the cold-storage portion is vacant, then technically the building contains enough business personal property to conduct customary operations, even if the cold-storage operation is no longer one of the customary operations. It is kind of a sticky way out of the vacancy clause, but an argument could be made for it not being applied in this instance.

In the second scenario, an insured with three separated buildings located on the same premises insured all of the buildings under a blanket policy. A theft loss occurred in one of the buildings, which at the time of loss had been vacant for more than 60 consecutive days. The other two buildings located on the same premises were not vacant.

Would this loss be covered under the Building and Personal Property Coverage Form (CP 00 10 10 90) and the Cause of Loss Special Form (CP 10 30 10 90)?

The CP 00 10 10 90 states, in the vacancy provision: “If the building where loss or damage occurs has been vacant for more than 60 consecutive days before the loss or damage, we will…not pay for any loss or damage caused by any of the following [including] theft.”

Because the building where loss or damage occurred was vacant, even though other buildings on the same blanket policy were not, this clause would prevent recovery because it addresses only the building where loss or damage occurred.

Unlike the previous example, with different occupancies in one building, this insured had one entirely vacant building among other occupied buildings. Customary business could continue in the building with just one vacant occupancy, but no customary operations could continue in the totally vacant building.