Vacant Property Coverage

Standard property policies have a vacancy clause that can leave your investment unprotected. Here's what investors need to know.

The vacancy clause problem

Most property insurance policies have a vacancy clause: if a building is unoccupied for more than 60 days, coverage is reduced or excluded entirely. This catches many real estate investors off guard.

Typically, the vacancy clause:

• Eliminates coverage for vandalism and glass breakage
• Reduces other covered losses by 15%
• May void coverage entirely for some perils

Why vacant buildings are harder to insure

Insurers see vacant properties as higher risk because:

• No one is there to notice problems (water leaks, break-ins)
• Vandalism and theft are more common
• Small issues become big claims without regular maintenance
• Squatters and liability exposure

When you need vacant property coverage

• Fix-and-flip properties during renovation
• Rental properties between tenants (if over 60 days)
• Properties awaiting sale
• Properties in probate or foreclosure
• Wholesale deals awaiting assignment
• Land with structures you're holding for development

What vacant property policies cover

Specialized vacant property policies typically cover:

• Fire and lightning
• Windstorm and hail
• Vandalism and malicious mischief
• Theft
• Water damage (varies by policy)
• Liability (someone gets hurt on your property)

Builder's risk vs. vacant property

If you're actively renovating, you may need builder's risk instead. Builder's risk covers the structure and the materials and equipment used during construction. Vacant property policies typically don't cover construction materials.