Vacant commercial building insurance is becoming harder and harder to find along with unoccupied property insurance and vacant home insurance. The good news is, as an Insurance Broker, we have a number of markets that we can still place this cover with.
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Vacant commercial building insurance is essentially the same as a typical commercial property insurance policy however, the difficulty lies in the insurer accepting the cover when you advise them that the property is unoccupied. Unoccupied commercial property insurance is an increased level of risk that the insurer takes on due to additional exposure points that occur when a property is unoccupied.
The increased exposure to the insurer for empty commercial property insurance policies is:
Most insurers will have specific conditions and underwriting criteria around empty properties before they agree to offer up an insurance policy.
Most of the major insurers will decline due to the properties not fitting within their target appetite however, our broader underwriting agencies will typically provide an insurance policy depending on the criteria being met.
After working with a number of commercial property owners that hold vacant properties in their portfolio for many different reasons we have developed many postitive relationships with a number of commercial building insurers that consider unoccupied properties.
Why should you use Priority Insurance Brokers to arrange your Vacant Commercial Building Insurance?
There are slight differences between whether a property is deemed as unoccupied or whether it is deemed as vacant. Vacant will typically mean that the property is totally empty with no furniture or contents inside. Unoccupied can be seen as a secondary property that is furnished however, is only occupied during certain parts of the year.
Yes, we do all difficult to place insurance risks that includes:
All unoccupied property insurance we can assist with.
This depends where you are at in regards to your policy period. If you currently have an insurance policy in place then the insurer will usually only apply an additional excess if the property became vacant or unoccupied during that policy period.
If you are at your renewal period and the property is currently unoccupied then the insurers will usually request to know if the property is expected to be occupied in the next 60-90 days. Although you may not be able to answer this specifically it comes down to your intentions for example, if the property listed for lease? If it is listed for lease then the intention is for the property to be occupied within this period.
More expensive is hard to answer. Is it more expensive than a tradition commercial building insurance yes, only because we have a limited amount of insurers that are willing to provide cover so it is hard to compare the two as we don't really have other options available in a reduced market capacity. To put it into perspective, we typically have 20 property insurers that will insure generic commercial buildings that are occupied however, if you are looking for unoccupied commercial property insurance, this reduces to about 5 give or take.
We understand that sometimes there are good and valid reasons for a property be unoccupied and this doesn’t reduce your need for insurance. Some common reasons we come across property owners needing vacant commercial building insurance are for things like deceased estates, renovations or the sale of a property. Regardless of your situation we will have a broker ready, willing and able to assist with insuring your unoccupied building.
Most policies have exclusions for properties being vacant for a certain period of time.
This is a very good reason to make sure that your policy covers your property being vacant. It is extremely important to build a good relationship with your Insurance Broker and keep them up to date with the intentions of your assets.
The worst thing you can do is assume that you are covered for something if you’re not. Alternatively, if you are covered there could be additional conditions that apply. For example, it is not unheard of policies charging an unoccupied excess in the thousands or even tens of thousands of dollars.
Unoccupied property insurance and vacant property insurance may be a little bit more expensive however, for larger assets like a property you can’t afford to take shortcuts.
Especially if this is your retirement fund, the property is under a mortgage or you rely on the property to produce future income.
We typically offer our clients a free review service to look over their current policies and discuss options with them. During this time we will typically ask details about the properties and what leases that you have in place. If you would like to check the policy yourself than this information will usually be found in the applicable policy wording (PDS) and reviewed in line with your policy schedule.
A policy schedule will usually outline an applicable excess whereas the PDS will outline the insurers definition and conditions around unoccupied commercial property insurance.
The first step is to speak with an Insurance Broker so that we can ask questions about your properties and get familiar with how you operate. This allows us to tailor a suitable package to your needs.
It is important that we discuss the current properties that you hold, what your intentions are and how we can best assist. All policies are put in place for a 12 month period so it’s important we discuss and plan for this period.
We will then contact a number of our insurers and request them to provide us with a quote. Once all of our quotes come back, we will review them and present you with the best option. We will outline our recommendation to you and seek your acceptance.
Once we have your instructions to proceed with the policy we will then organise payment of the policies. Policies can be paid annually or via our monthly premium funding options.
Yes, you can depending on the specific circumstances regarding the property. Most insurers that you are able to approach will have specific conditions around what they will accept and what they won’t.
No, you don’t. For full transparency of our remuneration, insurers pay us an agreed commission when you proceed with the policy. This is not in addition to what you pay and in most cases we are able to pass on a cost reduction to our clients by finding a more competitive policy or by reducing the impact of their quoted renewal premiums.
If you already have a policy in place than I would suggest that you review the policy in line with your expectation of the property and review it accordingly. For example, if the policy has a certain amount of days before an excess applies, you should take note of this and continue reviewing to see if any further conditions apply as the unoccupancy increases.
Although the property is vacant, the actual cover itself is designed to still protect the asset if something was to happen. For example, if the property was vacant and up for lease the property still has a significant value for the building component. Vacant property insurance is covered the same way its just that we have to declare to the insurer that the property is vacant, the reason its vacant and how long we expect it to be vacant.
Our broking group as access to some tools and calculators to measure and estimate the rebuild cost for commercial properties. This will provide you with an estimation, if you want something exact you will need to approach a professional surveying company to get an exact value.
No, not hard however, insurers tend to ask more questions and request more information to understanding exactly what they are insuring. We’ve all seen those properties that are boarded up on the side of a long country road that just looks rundown and completely abandoned. This is a good example of why insurer’s ask specific questions about empty commercial properties.
If this is a second dwelling or a holiday home type situation than you will have additional insurers that will provide you with unoccupied property insurance. This will work favourably to you as it shows that you are still maintaining the property and possibly have checks in place to ensure the property is okay. A vacant and unoccupied property are treated differently in the eyes of an insurance policy.
You should start considering this option when the situation occurs. This means that if the property becomes vacant and you know that it will be vacant for some time then you should start looking at your current policy and how the cover changes and plan accordingly.
This is very difficult to answer because there are so many components to consider. For example, with flood or without flood? How much is the building to be insured for and what excess would you like?
If you’re wanting to know how much a vacant property costs to insure then we recommend reaching out to us, we will gather some information and let you know how much the premium is. We will always put forward our best quote and we aren’t going to smother you in pushy sales tactics.
You should still have a policy in place for your property because there is still value in that property if it was to be destroyed. Although its vacant, the risk of squatters, malicious damage, fire damage and storm related damage still exists.
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