David Jones Insurance

Liability - Property - Auto - Workers Compensation - Health

We have been doing this for over 20 years, taking complex insurance coverages and analyzing your needs to accurately present and define you to the insurance markets. We focus on workers compensation insurance, health insurance, product and professional liability insurance.

Vacant Buildings Pose Risks, Insurance Challenges

According to the website Statista.com, the average vacancy rate for offices nationwide in the second quarter of 2018 was 12.2%, while 12.1% of retail spaces and 7.8% of industrial spaces were vacant. 

Unfortunately, when buildings stand vacant they become susceptible to a variety of problems.

There are roughly 31,000 fires in vacant buildings annually, resulting in dozens of deaths, hundreds of firefighter injuries, and an average $642 million in property damage.

Vacant buildings receive little or no maintenance, attention or security. This can lead to problems such as:

·     With no security on the premises, the building becomes a target for vandals. Vacant buildings frequently wind up with broken windows and graffiti-covered walls.

·     Fixtures and materials inside the building, such as copper piping, may attract thieves.

·     Vacant buildings can become convenient hang-outs for young people or shelters for the homeless; they also can become centers of criminal activity, such as drug-dealing.

·     Trespassers smoking on the premises, decayed wiring, arson, and production of illegal drugs like methamphetamines may cause fires in vacant buildings. In addition, automatic sprinkler systems may be shut off, allowing fires to spread, and lack of security prevents early detection.

·     Toxic substances remaining on the premises may leak and contaminate soil and groundwater.

 

Owners of vacant properties can take many steps to prevent these problems or make them less likely. 

·     Visit the property at least weekly, or hire a property management company to do so.

·     Clear the exterior of the building of scrap wood, paper, cardboard and brush.

·     Remove any toxic substances that could contaminate the area or harm police or firefighters.

·     Maintain sidewalks and parking areas in good condition, and clear them of snow and ice.

·     Erect obstacles to keep vehicles and pedestrians out of parking areas.

·     Hire security guards to watch the building at night, and have exterior lighting turned on.

·     Maintain heat or drain the plumbing system to keep pipes from bursting, but keep at least a minimum temperature in areas protected by automatic sprinkler systems.

·     Maintain electricity supply to emergency lighting and exit signs.

·     Shut off utilities, except where necessary to power desired lighting and alarm systems.

·     Maintain fire detection systems and link them to a central station monitoring service.

 

Insurance implications

Buildings that are more than 70% vacant for more than 60 days also lose some important insurance coverage. 

If the building is largely vacant, the standard commercial property insurance policy reduces loss payments by 15% for most causes of loss and does not cover others at all, including vandalism, water damage, glass breakage, and theft. 

For an additional premium, the building owner may be able to purchase vacancy permit coverage, which reinstates some or all of this coverage for a specific period of time. An alternative – vacancy changes coverage – can reduce the minimum occupancy that the building must have before the insurance company will consider it vacant from the standard 31%. We can work with you to get the coverage you need. 

A vacant building is never a good situation, but with the proper precautions, the owner can maintain its value and keep it secure until new tenants move in.

 

 

 

empty building.jpg

Business Interruption (Business Income) Insurance explained

 

Business interruption insurance can be as vital to your survival as a business as fire insurance. Most people would never consider opening a business without buying insurance to cover damage due to fire and windstorms.  How would your business manage if a fire or other disaster damaged the business premises so that they were temporarily unusable?  Business interruption can be added to a property insurance policy.  A business closed down completely while the premises are being repaired may lose out to competitors. A quick resumption after a disaster is essential. 

Business interruption insurance compensates you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire.  It covers profits and other operating expenses, like electricity, that continue.  Ensure policy limits are sufficient to cover your company for more than a few days. After a major disaster, more time may be needed than anticipated to get back on track. Generally, there is a 48-hour waiting period before coverage starts. 

Pricing is related to the risk of a fire or other disaster damaging your premises. The price may be higher for a restaurant than a real estate agency because of a greater risk of fire.

Extra expense insurance reimburses your company for expenses incurred, over and above normal operating expenses, to avoid having to shut down during the restoration period. Extra expenses are usually paid if they help to decrease business interruption costs.  To discuss this or any other business insurance product please contact me:

David Jones

800 590-2531

david@davidjonesinsurance.com