Most people know that insurance protects against losses from events like fire, theft, or vandalism. However, what’s not widely understood is that if a commercial property remains vacant for too long—usually over 30-60 days—many standard policies include a “vacancy clause” that can reduce or even void coverage. This clause is intended to limit risk because insurers see vacant properties as more vulnerable to damage or criminal activity.
For business owners, this can be a costly surprise if they’re in between tenants or if renovations have stalled and the property sits empty. The vacancy clause could mean significantly reduced payout on claims or no payout at all, depending on the insurer’s policy terms.
To counter this, some commercial property owners opt for a “vacancy permit endorsement,” which extends coverage during periods of vacancy. However, this option usually comes at a higher premium, and even with the endorsement, there are often exclusions.
Understanding these vacancy provisions is essential for any commercial property owner or business relying on leased spaces—it can mean the difference between getting full coverage or facing major financial risk if something happens while the property is empty.