How To: Managing Your Vacant Commercial Property During A Pandemic

Do you own a commercial property? Has it been vacant for extended periods throughout the pandemic? As we approach the 1-year anniversary of COVID-19 restrictions in Canada, many of us are reflecting on the past year and looking ahead at changes we should be making to protect what matters most.

In this blog, we explore how to navigate the management of your vacant or unoccupied commercial property during the pandemic.

What are the risks associated with a vacant or unoccupied property?

Vacant or unoccupied properties are more susceptible to perils such as theft, vandalism, and physical damage due to fire, water, and weather. All these risks can affect how your insurer would handle potential claims. Generally, commercial property policies will not include loss or damage at locations which are vacant, unoccupied, or closed down unless the policy includes a vacancy permit.

Is there difference between a ‘vacant’ and ‘unoccupied’ space?

Yes. From an insurance perspective, the distinction between the two is very important because policies tend to have vacancy exclusions, but not unoccupancy exclusions.

Typically, a vacant property refers to a space that is completely empty – meaning it lacks both people and property. An unoccupied property on the other hand, refers to a space that is not actively being used, but it has been left in a state where it still contains all items and possessions as if the occupants were to return at any time. In general, a commercial property can be considered vacant by an insurance company if it is not occupied for 30 days or more, but the occupant’s intention to return to the property also contributes to the building’s occupancy status.

How has this distinction shifted during COVID-19?

Given the current situation, which has us facing stay-at-home orders, lockdowns, and more, insurance companies are recognizing that commercial property occupants are being legally required to close down operations by provincial and municipal governments. In response, many insurers are making accommodations to coverage exclusions for properties which have been vacant as a direct result of COVID-19 restrictions.

What should I do to protect my vacant property?

Follow these steps to avoid any claims for your vacant or unoccupied commercial property:

1. Monitor your property. Check in on your property every 36-72 hours and scan for any signs of vandalism, theft, or damage. Keep a log of your visits to track how often you inspected the premises.

2. Keep the lights on. Unlit businesses are more appealing targets for thieves; keep the exterior and entrance of your property well-lit.

3. Secure your property. Ensure all access points to your business are locked. Keep surveillance systems operational, verify your alarm system is armed and functional, and place a notice on the door stating the property is being monitored 24/7 as a deterrent.

4. Remove valuables. Remove ALL cash and receipts from your space. This includes emptying tills and safes and relocating any valuables to an off-site storage location. If valuables cannot be removed, move them out of sight from the exterior of the property.

5. Practice Fire Safety. Fire and smoke alarms must be checked and remain operational. Safety equipment must also be serviced regularly, in accordance with fire codes, and sprinkler systems must remain active.

6. Maintenance is key. Ensure regular maintenance is up to date, this includes everything from roof repairs, and HVAC systems, to gas lines, refrigerators, and water pipes.

7. Know your policy. Knowing your insurance policy is vital. Insurance companies have different requirements, make sure you understand your responsibilities.

Do I need to talk to my insurance broker?

YES. Let us say that again, YES. Having an open conversation with your broker is crucial to ensuring your vacant or unoccupied commercial property is protected and your coverage is up to date.

Don’t delay, Contact us today to discuss your unique situation.