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What should you consider if you have to close properties?

Risk & Analytics|Property
COVID 19 Coronavirus

By John Barghout and Daniel R. Linsley | April 15, 2020

To decrease the spread of COVID-19, organizations are shuttering their work places. Management is key to protecting and advising on risks with temporary closures.

In order to help curtail the spread of the COVID-19 virus, many businesses and organizations throughout the world are temporarily shuttering their work places or planning to do so. These temporary closings can create additional anxiety, fear and even anger from employees as well as civil unrest within the general public. This can lead to malicious behaviors resulting in harm to a company’s property as well as physical and financial assets.

Management plays a very important role in safeguarding closed properties and should advise key stakeholders within their organizations of the risks involved with temporary closures and vacant, idled buildings.

Several key factors make a vacant, idled building especially vulnerable. An unoccupied facility is an easy target for arson, vandalism, trespassing and burglary.

  • Inadequate care and supervision of vacant, idle facilities can result in minor problems growing to larger concerns.
  • Utilities and other building services may be shut off without careful consideration of the consequences.
  • Where local government and authorities have issued “shelter-in-place” requirements, shuttered buildings may be unattended for an extended period.

Property coverage concerns

Vacancy provisions

Property insurance policies should be reviewed with your broker to verify whether there are any vacancy provisions. While vacancy provisions may not be common in policies for large organizations, they are common in the mid-market and package policy space. In addition, vacancy provisions vary from insurer to insurer. Some insurers provide a remedy (e.g., if security is maintained) and some do not. Normally if a property is deemed vacant, the policy provides actual cash value in the event of a loss as opposed to replacement cost. The best advice is, when possible, comply with all policy provisions related to vacant properties. When not possible due to state or local authority orders to shelter in place, report this to your broker so they can advise the insurer and seek exceptions on your behalf.


In addition to vacancy provisions, discuss any warranty provisions (e.g., automatic fire sprinkler warranty) with your broker in order to not jeopardize coverage.

The Perils


The most prominent and costly peril facing an idle or vacant facility is fire. Based on data collected during 2010-2014 from the National Fire Incident Reporting System (NFIRS) conducted by the U.S. Fire Administration (USFA) and the annual fire department experience surveys conducted by the National Fire Protection Association (NFPA)1, nearly 50,000 intentional fires were reported to U.S. municipal fire departments each year, with associated annual losses of 380 civilian deaths, 1,100 civilian injuries and $860 million in direct property damage. Property insurance companies report the threats of arson fires and/or vandalism is greater at vacant, idled properties.

Another NFPA study2 found that approximately 43% of reported vacant building fires were intentionally set. Vacant buildings are appealing arson targets because they are usually easier to enter unchallenged. The risk is greater when vacant buildings contain combustible materials. Vacant buildings also pose a fire threat to nearby buildings and structures. When vacant facilities lack a monitored alarm service and/or on-site guards, fires can spread before they are reported.


A prominent threat to a vacant, idle building is vandalism. Vandalism is the willful marking upon, defacing and damaging of property. Whether a purposeful crime or a prank, vandalism can result in significant cost, especially if the vandals cause a more serious problem such as a fire.


There was a total of 27,514 claims for the theft of copper, aluminum, brass and bronze submitted to the Insurance Service Office (ISO) with a date of loss between January 1, 2014 and December 31, 2017. Of the 27,514 total claims, the vast majority (98%) pertained to the theft of copper and 36% of the losses occurred at commercial policies.3 In one insurance company’s analysis, there were 22 such incidents within vacant buildings in 2006 totaling over $2.1M in losses.4 By 2008, the same insurer reported the number of copper thefts increased totaling losses up to $9M, mostly from vacant retail locations.5 While the number of metal theft claims increased from 2006 through 2011, the number of claims began to level off in 2012 and then progressively decreased each year from 2014 through 2017.6

Bad weather

When buildings are vacated, periodic inspections and maintenance are sometimes reduced or eliminated. Damages from wind and rain can often be worse to an idle or vacant building as it goes unnoticed for prolonged periods. During freezing weather, where utilities are shutoff to reduce operating costs of the vacant building, water damage can occur from frozen domestic and fire sprinkler pipes. Water flow can go undetected for days or weeks.

Protection strategies

This serves as general guidance - all organizations should follow federal, state and local COVID-19 direction, orders and mandates as to accessing properties, sheltering in place or other restrictions.

Maintain fire protection systems

The most effective protection a facility can have against fire is automatic sprinklers. It is critical that sprinkler systems be maintained in good working order. Contracts for periodic sprinkler system inspections, tests and maintenance should be maintained while the building is vacated. National Fire Protection Association (NFPA) Standard No. 25 outlines the minimum inspection and testing requirements.

During cold weather, building heating systems should be maintained to prevent freezing of sprinkler piping. The minimum recommended building temperature is 40 degrees F. Where buildings are protected by air-filled, “dry-pipe” sprinkler systems, make sure the compressed air supply is left in service.

Sprinkler systems are useless without an adequate water supply. All sprinkler and water supply control valves should be locked in the open position. Where provided, fire pumps should be left in automatic service. Power to electric-motor driven fire pumps should be left ON and fuel tanks for diesel fire pumps should be maintained full.

When permitted by local government and authorities during mandated “shelter-in-place” orders, weekly start tests of fire pumps and monthly sprinkler valve inspections should be arranged and documented by suitable inspection reports. Inspection and test reports should be filled out and left on site for review.

Fire alarm systems must remain in service and monitored by an approved central station alarm company. Telephone service and electric power to fire alarm systems should be left in service. Fire alarm system service contracts should stay in place. Periodic inspections and tests of fire alarm systems are required by NFPA Code and should be kept up to date, if permitted by local government and authorities during shelter-in-place orders.

Review site security needs

Prior to closing a business, consider adding security, if permitted within the context of local government orders to shelter in place. Security should conduct routine patrols throughout the duration of a temporary closure. If security cannot be provided, the vacant property should be regularly inspected by a caretaker, at least once a week, again if allowed by local authorities.

The building should be secured. Doors and ground level windows should be locked closed. Consider adding deadbolts, where needed, to exterior doors. When perimeter fencing is installed, gates should be closed and secured. Where exterior roof access is provided, make sure that roof hatches are locked and remove or lockout ladders. Other considerations include:

  • Maintain electric power and telephone service to building intrusion detection systems and closed circuit television (CCTV) security cameras and recording systems.
  • Require any and all vendors to have pre-authorization if work is planned during the idle period. Work should be supervised. All workers should be required to sign in and out.
  • Maintain ample levels of exterior and interior lighting.
  • Notify local police and fire authorities that the property will be vacated. Review any changes to the authority’s pre-emergency plans.

Be prepared for bad weather

The best protection against severe weather for a vacant building is good preparation and planning. Confirm that roof drains are not clogged. For extended vacancy, consider routine roof inspections to check for any unusual roof conditions such as sagging or ponding. Both could be signs of serious roof problems that will only get worse.

In the event of a winter storm, the roof should be inspected for large snow/ice accumulation. Excessive accumulations should be removed.

If security is not provided, consider having the building interior temperature monitored with alarms set to alert someone when building temperatures fall below 40 degrees F. Where possible, other building and process water lines should be drained empty with valves locked shut.

If the building is located in a high wind zone of a coastal area and is to be maintained vacant during “hurricane season”, which extends from June 1 through November 30, consider taking appropriate measures. Glass doors and windows should be boarded up or protected with approved shutters.

Where exposed to known flooding and when temporary flood barriers are provided, the flood barriers should be installed and periodically checked. Flood control systems such as sump pumps should be checked and left in service. A complete inspection of the building should be conducted after every major storm to check for any damages.

Maintain physical appearances

It is important the building remains in good appearance by keeping the lawn mowed, removing weeds, and trimming bushes. This helps to give a neat appearance to the property which could deter vagrants and trespassers, since they will see that someone is looking out for the property. Lawn-maintenance and building maintenance contracts should be kept in place. Other considerations are:

  • Maintain good housekeeping and sanitation pickups. Outside the building, remove any storage or combustible waste materials in the yard.
  • Assign a building caretaker to conduct periodic checks of the vacated property and grounds.

Before closing

Whether the building is to be temporarily shuttered or vacated and maintained idle for an extended duration, developing and executing a well thought out plan is crucial. This may help avoiding a major loss.

It is recommended that the property underwriter be sent an email advising the property is to be shuttered with a request for receipt acknowledgement.

In anticipation of temporary furloughs or employee layoffs, companies should be aware of potential security issues during such times. Be alert to discontented employees who may seek to harm the organization or create a workplace violence incident. It is recommended best practice to increase security prior to this crucial time until the building is completely vacated and secured.

Management should exercise tight control of keys and access cards. Key card access for furloughed or laid-off employees should be de-programmed immediately. Keys, parking and building passes must be all collected.

Management should contact the local government and/or authorities seeking guidance whether on-site security is permitted and if contractors can continue providing periodic fire sprinkler and alarm system inspections, under temporary “stay at home” policies.

Intellectual property should be carefully guarded against theft or sabotage. Restrict access to company computers and invalidate passwords as soon as employees leaveand confirm that company intranet access is adequately secured.

Construction project cessations

Depending on governmental mandates, geography and population infections, project managers may lose access to the anticipated workforce due to mandatory quarantines. Plans should be developed for potential project shut downs on both a short-term and long-term basis. Specifically, if a project is shut down, the construction site must be made secured. The site should be completely fenced and monitored. Materials should be secured and tower cranes dressed or dismantled.

General liability policies have exclusionary language pertaining to project abandonment, thus it is critical to discuss project security with the carrier to reduce the potential for coverage to be voided. Willis Towers Watson can guide you through this process and discussions with your carriers.

Regular idle building visits

Property insurance companies recommend regular checks of idled buildings by the owner or a designated caretaker. The frequency of the recommended idle building visit depends on the insurance company and the level of fire protection and security afforded to the building while it is vacant.

If the vacant facility has adequate fire and intrusion alarms, a minimum visit schedule of once per week will normally suffice. If security personnel are left on site 24/7, then monthly or quarterly idle building visits may be acceptable. Regular idle building visits are also subject to local government exceptions to “shelter-in-place” rules.

Idle building visits should review the adequacy of fire and security measures as well as housekeeping and building and grounds maintenance. It is recommended that idle building visits be documented with a formal checklist type report. Records should be left on site for review and audit.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.

COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.


1 Richard Campbell, “Intentional Fires”, National Fire Protection Association, July 2017
2 Mary Ahrens, “Vacant Building Fires”, NFPA Fire Analysis and Research, 4/09, iv.
3 Christopher McNees, “Forecast Report”, National Insurance Crime Bureau (NICB), March 14, 2019
4 Charlie Bauroth and Tanya Gilbreath, “When Vacancy Is unwelcome: Vacant Buildings offer open invitation to vandals and mother nature,” Axon Group, Gale, Cengage Learning, 2009.
5 Ibid.
6 McNees, op. cit., p. 1


Regional Risk Control Director, Risk Control and Claim Advocacy Practice

P.E. V.P. & Senior Property Risk Control Consultant

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