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Commercial Insurance May Not Cover Shuttered Businesses

Every policy is unique, but some business policies void coverage altogether if a building is closed – or shuttered incorrectly – for 60 days or more.

NEW YORK – A vacant building policy differs from a standard commercial property insurance policy, but general policies usually outline a definition for vacant properties – usually something like locked and unoccupied for perhaps 60 days or more. And under that definition, the policy often becomes ineffective once the 60 days is reached.

That could become problematic for some companies as more people work at home during the COVID-19 pandemic.

Many insurers will likely be flexible in enforcing this part of the contract; some likely will not. And even those companies that will be flexible may have additional rules that must be followed, such as regular visits to the property once per week or even requiring that plumbing systems be drained to avoid potential leaks.

In the United Kingdom, commercial policies tend to have a vacancy clause kick in after only 30 days. Many insurers there have said they’ll be flexible enforcing their vacancy rules during the pandemic, but some have not.

One charity, the Reading Community Learning Centre that helps migrant women, was told that their tenancy rule would be enforced if they didn’t seal classrooms, offices and even mailboxes. They had to turn off gas and sprinkler systems and drain all water mains if the building was going to be unoccupied.

“We were told in no uncertain terms that our tenancy was at risk if we didn’t follow a long list of requirements including visiting the property once a week, keeping a record of it, and removing all refuse,” Sarah del Rufo told The Guardian. “I don’t think many small businesses and other bodies like ours are aware that they risk being uninsured. Our policy states that Axa will not pay any subsequent claim unless we meet these requirements. So far it has not upgraded its policies to reflect what’s going on.”

Source:, Miles Brignall

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