But my building is vacant, why do I need insurance?

If you own an investment property in either a commercial or residential zoning area, you may think that you don’t need to insure it as long as it remains vacant. Unfortunately, this way of thinking could lead you to lose value within an important asset.

Vacant buildings might not have the same exposure to risk as those that are occupied do, but the owners still need financial protection from the risk of liabilities and loss in the form of structural damage. A fire, natural disaster or vandalism could befall a vacant building just as easily as an occupied one and without insurance, the owner of the building would either face a loss of property value or the need to dig into other assets to pay for repairs. In the case of a destructive event like vandalism, a vacant building could run an even greater risk of exposure since they are left completely unguarded by human presence the majority of the time. And while you may not have individuals traipsing in and out of the vacant building on a daily basis, anyone who happens to wander into or around your property who also becomes injured can still sue you, which still leaves you financially exposed to costly liabilities.

Just as with insurance on occupied buildings for either business or personal use, insurance for vacant buildings can provide you with liability protection that ensures you don’t pay the majority of medical expenses for anyone hurt on the property. It also provides financial protection against loss due to disaster or theft, with limits reaching as high as rebuilding costs. In order to create manageable premiums, you can adjust your deductibles so that you increase your own risk of financial exposure and lessen the insurer’s.

Insuring a vacant property is not the same as insuring one which is occupied. You have different risks and exposures which create different levels of premium cost. But that doesn’t mean that no insurance is necessary—because as long as you have any risk exposure, you need to make sure you have some financial means of covering it that doesn’t involve the liquidation of other valuable assets.