What it means
Vandalism means wilful or malicious damage to property, and malicious mischief is the older legal phrase for the same kind of deliberate destruction. The cover is designed for losses caused by other people acting with intent to damage, which are different from accidents, wear and tear, or theft.
Many commercial property policies and homeowner policies include this cover as one of the named perils, which are the specific events the policy agrees to pay for. Where it is not included, it can often be added by endorsement, which is a written amendment to the policy.
Typical claims include graffiti on a shop front, a broken window, damaged vehicles in a car park, slashed seats in a venue or vandalised equipment on a building site. The insurer normally pays the cost of repair or replacement, minus the policy deductible, which is the amount the policyholder bears first.
Claims are usually paid on an actual cash value or replacement cost basis, depending on the policy. There are important limits.
Policies often exclude vandalism in a building that has been vacant for longer than a set period, such as 60 consecutive days, because empty buildings attract damage and the owner is less able to prevent it. Theft and burglary are generally covered separately, and damage done by the policyholder or their employees is usually excluded.
Businesses should read the definitions carefully, since a break-in may involve both theft and vandalism and each part can be treated differently. Reporting the incident to the police promptly also supports the claim.
For finance teams, the cost of this cover is small compared with many other lines, but the deductible and the vacancy exclusion matter. A property manager with empty units should check whether the cover continues while a unit is unoccupied.
In practice
Real-world examples.
Example
A retail chain finds that its shop front has been covered in graffiti overnight. The cleaning and repainting cost is $6,000, and the chain has a $1,000 deductible. The insurer pays $5,000, and the chain files the claim with photographs taken before the cleaning started.
Example
A school discovers that intruders have smashed computers and flooded two classrooms by blocking sinks. The damage total is $45,000, and the school's property policy includes vandalism cover. The insurer pays the repair and replacement costs less the deductible, and the school's business manager records the claim as a recovery in the accounts.
Example
A landlord leaves a block of flats empty for four months while planning a refurbishment. Vandals strip the copper piping and break windows, but the policy excludes vandalism after 60 days of vacancy. The claim is refused, and the landlord pays for the repairs.
Formula
Calculation
Claim payout = Lower of (Loss amount - Deductible) and Policy limit
A restaurant has vandalism cover with a $100,000 limit and a $2,500 deductible. Vandals smash the front windows and spray paint over the exterior, causing $18,000 of damage. Claim payout = 18,000 - 2,500 = $15,500, which is well within the $100,000 limit. The restaurant bears the first $2,500 and the insurer pays the remaining $15,500.Case study
Seen in the real world.
This illustrative story involves a fictional property company, Hartwell Estates, which bought a former office building to convert into flats. The building stood empty for five months during planning approval, and the finance manager assumed the standard property policy would cover any damage.
Vandals broke in over a weekend and caused $60,000 of damage to fixtures and windows. The insurer rejected the claim because the policy excluded vandalism in a building that had been vacant for more than 60 days, and Hartwell had not told the insurer about the vacancy.
The fictional company absorbed the loss, and afterwards changed its process. It now notifies the insurer of any vacancy, buys a vacant property endorsement where available, and arranges regular security patrols. The case shows that the cover is only as good as its conditions.
Watch out
Common mistakes.
- Assuming cover continues unchanged when a building is empty. Many policies restrict or exclude vandalism after a vacancy period such as 60 days.
- Treating vandalism and theft as the same peril. They are often covered separately, and a single incident can involve both, with different limits.
- Forgetting the deductible. Small claims can fall entirely within the deductible, so the cover may not respond to minor damage.
Questions
People also ask.
Is this cover included in standard property insurance?
Often it is a named peril in commercial and homeowner policies, but it should be confirmed in the policy wording.
Who is not covered?
Damage caused by the policyholder, family members or employees is normally excluded, and so is gradual deterioration.
Does it cover loss of income while repairs are made?
Not by itself, but a business interruption policy may respond if it is linked to the covered damage.
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