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ISO - Property Insurance Policies & Vacancy Issues

Today's market circumstances have not been experienced for many decades. Economic difficulties may potentially create changes in our insurance customers' circumstances. Some change may raise...
July 6, 2009

Today's market circumstances have not been experienced for many decades. Economic difficulties may potentially create changes in our insurance customers' circumstances. Some change may raise questions about how various property insurance policies currently respond to matters concerning "occupancy, change in insuring conditions, vacancy, foreclosures" and the like as applied to existing insurance coverages.

The scope of vacancy and foreclosure situations in today's markets has many more incidents and a far wider variety of complex circumstances and parties at interest.  Further, it has decidedly different considerations between and among:  PL HO (single through 4-family homes) vs. PL DFP (single or multi-dwelling) vs. CL properties (owner-single occupied vs. owner + rental space vs. mall space rentals vs. offices vs. manufacturing vs. professional etc.) And there can be state-by-state insurance law/regulation differences.

PIA National is working with ISO and also reaching out to carrier trade associations and our carrier partners advising that the time is right for insurers to issue a reminder to their property insurance policyholders concerning their policy provision/underwriting expectations in all the circumstances that could arise in terms of the vacancy and/or foreclosure situations. This carrier-specific property insurance policy form reminder would also include a copy to the listed insurance agency.

This copy of the carrier-issued reminder will also update PIA member agencies as to how in today's economic atmosphere each of your carriers view how these differing circumstances should be reported to the agency/carrier as they arise and/or may affect insurance premium costs and/or coverage of currently issued property policies and/or the carrier's considerations upon renewal.

Further, PIA is encouraging ISO and carriers to review, reconsider and liberalize their current CL property forms vacancy ratio formulas. Further, in both CL, and on any PL property policies where rental vacancy is a consideration, we're asking that they allow the named insured to present their risk management actions to increase their safe-guarding of the insured properties during these vacancy periods, as an acceptable underwriting consideration.

We ask PIA affiliate leaders to please advise us if your state DOI has issued any recent clarifications to questions regarding property insurance and vacancy related issues, and if so, please share copies so that we can post these for all PIA members' benefit since PIA members write property insurance across state lines. Comments should be sent to Pat Borowski at

PIA also thinks that ISO, carrier trades and insurers should also remind lenders of these provisions and conditions in current property policies.

For more information on this issue, please read the July 2009 PIA National Business Issues Committee Technical Working Group paper, "ISO - Property Insurance Policies & Vacancy Issues (Word document)."