The Michigan Court of Appeals found the insured was not covered for water damage because the commercial space was left vacant. Cherry Hill Recreation Center, Inc. v. Conifer Ins Co., 2026 Mich, App. LEXIS 5099 (Mich Ct. App. June 18, 2026).

Alan Abbas purchased a bowling alley. Due to the onset of the COVID-19 pandemic and executive orders issued by the governor, Abbas was unable to operate the bowling center for several months. During the winter, Abbas allowed the thermostat to drop significantly, with the building expected to be around 43 degrees Fahrenheit. He later admitted the sprinkler system’s pipes were not protected against freezing.

When the restrictions were lifted, Abbas took steps to reopen. He discovered significant water damage. A pipe feeding the building’s fire-suppression sprinkler had burst after freezing, apparently due to unexpected exposure to outside cold air. Abbas submitted a water damage claim to Conifer Insurance Company. Coverage was denied because the building was vacant, and the head had not been properly maintained.

Abbas filed suit. The trial court agreed there was no coverage because the building was vacant.

The policy stated there would be no coverage for certain losses plaintiff suffered if the building was “vacant for more than 60 consecutive days” before the loss or damage occurred. One such loss was for “sprinkler leakage, unless you have protected the system against freezing.” Because Abbas conceded he did not protect the system against freezing, Conifer had no liability to cover damage caused by the sprinkler leakage if the building was vacant for at least 60 days prior to the loss. The policy defined “vacant” as not containing enough business personal property to conduct customary operations. A second definition provided that when the policy was issued to the owner or general lessee of a building, the building was vacant unless at least 31 % of its total square footage was used by the building owner to conduct customary operations.

Here, the insured’s possessory interest was in the entire building not merely a unit or suite. Under the terms of the lease held by Abbas, he was to “occupy the said premises” without exception and “keep the said premises and every part thereof in as good repair’ as at the commencement of the lease.

The term “general lessee” fit the insured here: where a party technically does not own the building but exercises owner-like control over the entire premises under the terms of the lease. It was apparent that Abbas was a “general lessee” under the policy.

Therefore, the building was vacant unless the insured – the general lessee – was using it to “conduct customary operations.” The appellate court agreed with the trial court that Abbas was preparing to open. Being prepared to open, even with the intention to do so later int he month, was not the same as actually being open.

Here, the building was vacant and had been since the pandemic-related shutdowns began nearly 11 months before the burst pipe. Conifer did not assume the risk of insuring a vacant building – regardless of why it was vacant. The judgment of the trial court was affirmed.