Property · Insurance Term
Vacancy Clause (Vacancy Provision)
Definition
A vacancy clause reduces or removes property coverage when a building has been vacant for more than 60 consecutive days. Under the common standard wording, some losses like vandalism, theft and water damage are not covered, and other covered losses are paid 15% less.
In Plain English
Under the standard commercial property condition, if the building was vacant more than 60 consecutive days before a loss, there is no coverage for vandalism, sprinkler leakage (unless protected against freezing), building glass breakage, water damage, theft or attempted theft. Other covered losses are reduced by 15%.
For an owner, a building is generally vacant unless at least 31% of its total square footage is rented to a tenant and used for customary operations, or used by the owner for its own operations. Buildings under construction or renovation are not considered vacant.
Your policy's wording controls, and some policies are stricter. A vacancy permit endorsement can restore coverage during planned vacancy.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a 10,000-square-foot strip center has only one 2,500-square-foot unit leased and operating, or 25%. After 60 days, a fire causes $100,000 of damage. Under the standard condition, the payment could drop by 15% to $85,000, before the deductible.
Why It Matters for Texas Property Owners
Freeze events like Winter Storm Uri showed how fast pipes can burst in empty, unheated spaces. Water damage and unprotected sprinkler leakage are among the losses excluded in vacant buildings under the standard condition.
What to Watch For
- Track occupancy percentage for multi-tenant buildings, not just whether a building has tenants.
- Tell your agent before a building or large space goes vacant.
- Ask about a vacancy permit endorsement for planned vacancies.
- Keep heat and water protections working in empty spaces.
Common Questions
My building is half leased. Is it vacant?
Under the standard condition, a building is not vacant for the owner if at least 31% of its total square footage is rented and used for customary operations. Your policy may use different wording, so check it.
Does renovation count as vacant?
Under the standard condition, buildings under construction or renovation are not considered vacant. Some policies treat this differently, so confirm with your agent.
Sources
Last updated October 14, 2026 · Primesure editorial team · How We Write