If your commercial building is vacant for more than 60 days, your insurance coverage could be reduced or denied. However, buildings under active construction or renovation may qualify for important exceptions. Always review your policy before starting upgrades.
Commercial property owners in Santa Ana and throughout Orange County are often surprised to learn how strict insurance policies can be once a building is considered “vacant.”
Many standard commercial property policies include a vacancy clause that can significantly reduce coverage if a building sits empty for more than 60 consecutive days.
Understanding how vacant commercial property insurance coverage in Santa Ana California works can help you avoid unexpected claim problems.
How Vacancy Exclusions Work
Most commercial property policies based on Insurance Services Office (ISO) forms contain a “vacancy condition.”
If a building is vacant beyond 60 consecutive days before a loss occurs, the policy may:
- Provide no coverage for vandalism
- Exclude theft or attempted theft
- Exclude certain types of water damage
- Exclude sprinkler leakage (unless properly protected)
- Reduce payments for other covered causes of loss by up to 15%
For property owners, a building is generally considered vacant if less than 31% of the total square footage is rented or used for normal operations.
Why does this matter? Empty buildings are at greater risk for:
- Undetected leaks
- Vandalism
- Copper theft
- Fire hazards
With fewer people present, problems often go unnoticed longer.
What Happens During Renovations?
Here’s where many owners get confused.
ISO forms recognize an important exception:
A building under construction is not considered vacant.
Over time, courts have extended that reasoning to include buildings undergoing active renovation.
One key case is TRB Investments, Inc. v. Fireman’s Fund Insurance Company (California Supreme Court, 2006). The court ruled that a building under renovation qualified for the same protection as one under construction.
The reasoning was practical:
Renovation projects often involve daily worker presence, materials moving in and out, and ongoing activity — reducing the risks that vacancy exclusions are designed to address.
Today, modern ISO commercial property forms reflect that reasoning.
However, the protection depends on real, ongoing renovation activity, not simply planning or partial work.
Real-World Example in Santa Ana
Imagine a retail building in Santa Ana where tenants move out. The owner plans major upgrades before re-leasing the space.
If the property sits empty for 70 days with no activity, and vandalism occurs, coverage may be limited or denied.
But if contractors are actively remodeling the space during that period, the vacancy exclusion may not apply.
The difference can mean tens or even hundreds of thousands of dollars.
Why Vacant Coverage Is Often Overlooked
Vacancy exclusions are one of the most misunderstood parts of commercial property insurance.
Property owners sometimes assume:
- “It’s insured, so I’m covered.”
- “It’s only temporary.”
- “Renovation automatically protects me.”
But coverage depends entirely on:
- Policy language
- Type of activity occurring
- Duration of vacancy
- Endorsements added to the policy
How Neighborhood Insurance Agency Can Help
Established in 1989, Neighborhood Insurance Agency in Santa Ana, California, helps commercial property owners understand the fine print of their coverage — including vacancy provisions.
Before starting renovations, we recommend reviewing:
- How your policy defines vacancy
- Whether renovation activity qualifies under your form
- Whether supplemental vacant property coverage is needed
Because avoiding a claim denial is far easier than fixing one later.
Protecting your property properly is the key to your peace of mind.
👉 Get a quote or talk to us today.
Santa Ana, CA 92705
Reference
International Risk Management Institute, Inc. (2026). Vacancy- What does it mean for Commercial Property Coverage? Retrieved from https://www.irmi.com/articles/expert-commentary/vacancy-what-does-it-mean-for-commercial-property-coverage
TRB Investments, Inc. v. Fireman’s Fund Insurance Co., 40 Cal. 4th 19 (Cal. 2006). Retrieved from https://law.justia.com/cases/california/supreme-court/2006/s136690.html
