Insurance for Unoccupied Buildings
A second UK lockdown has forced a number of businesses to re-close their doors, and shines a light once again on insurance for unoccupied buildings.
Any landlord that has had an empty building for a length of time will probably be well aware of the difficulties in covering an unoccupied building and in a lot of circumstances insurers will automatically restrict the cover they provide, often removing theft, escape of water, and storm damage along with other perils.
If a property you own and insure is going to be vacant for any length of time, whether due to a lockdown or simply tenants moving out, it's important to check the conditions of your policy for the period of unoccupancy.
Most insurers will have some variation of the following control measures:
- Inspect the property at regular intervals (usually every week or two) and document the inspections and any findings
- Ensure all physical security measures are in place and the intruder alarm is set to prevent unlawful entry
- Remove all waste materials from the property and regularly remove any build-up of post
- Turn off electricity, gas, and water supply except where required to power intruder/fire alarm systems or sprinkler systems
Many insurers will also require notification as soon as a property becomes unoccupied.
We're available for any further advice or guidance regarding your property insurance queries, and we have access to a number of insurers who will provide full cover whilst properties are vacant as opposed to restricting cover. Give us a call on 01226 744716 for more information.
Frequently Asked Questions
Can I insure an empty property which is for sale?
Yes, and we have insurers which can provide short-term policies as well if you expect to sell within a matter of months.
What if I haven't followed all of the conditions and need to make a claim?
Insurers can no longer automatically reject a claim just because a condition or warranty has not been followed.
Since the Insurance Act 2015 came into force an insurer can only reject a claim for breach of conditions if the breach contributed to the claim happening. For example, if you have an unoccupied property and have not turned off the mains electricity and gas supplies, then the property suffers from storm damage to the roof, the claim should be paid out despite the condition breach.
If however you had not switched off the main electricity and then there was an electrical fire, then insurers would more likely be able to reject the claim, because if the conditions had been adhered to the claim would probably not have happened.
What if a property becomes unoccupied part-way through the policy period?
If a property you insure becomes unoccupied mid-term simply let us know and we can contact your insurance company. They will usually amend the policy accordingly and continue cover at least until the end of the policy period.
If the property is still unoccupied and will remain so for some time we may need to move cover to a more specialist company and we can look into this on your behalf.
Why is it more expensive to insure a property once it is unoccupied?
Unoccupied properties are much more likely to be subject to claims, whether it is due to them becoming targets for vandalism and arson attacks, or because any small leaks ("escape of water") can go unnoticed for a longer time resulting in more extensive damage.
Many insurance companies don't want to insure unoccupied properties at all, and as a result the insurers that are willing to quote can quote higher premiums as they have less competition.