The importance of unoccupied property insurance

Posted: 23rd Mar 2016

Estate Agent Looking Around Vacant Property For ValuationWithout it, the property you own might be exposed to all manner of risks of loss or damage. That is why unoccupied property insurance is so important – it steps in to provide the necessary cover at a time when you might need it the most.

What are the risks?

Some of the problems most frequently encountered by owners of empty or unoccupied property – aside from storm, flood and fire etc. – may typically include:

  • if it is normally let – whether for residential or commercial use – there is, of course, a loss of rental income; but
  • significant threats also come from vandalism, squatters, arsonists, fly-tipping and graffiti;
  • within the last decade, squatting has been made illegal, but this has done little to reduce the number of squatters, which is still an issue;
  • in addition to wilful damage, empty properties are also vulnerable to the need for initially minor repairs and maintenance to develop into major incidents – and serious damage – if left unnoticed and unattended;
  • in time, any one or all of these problems are compounded as concerns are shared by owners of nearby properties and the neighbourhood in general enters a downward spiral of decline.

The insurer’s reaction

In the face of risks and perils such as these, it is hardly surprising that insurers are wary in the extreme about continuing cover for a property that has become vacant and unoccupied.

So wary are most insurers, in fact, that the cover which normally protects an owner occupied residence or buy to let residential or commercial property typically lapses or is severely curtailed once the premises have been unoccupied for a given length of time.

In the case of owner occupied residential property, for example, this interval may be as short as 30 consecutive days since no one has been living there. The precise interval may vary from one insurer to another, but any cover for any type of property is likely to lapse or become significantly restricted after a period of, say, 30 to 60 consecutive days.

Unoccupied property insurance

When the insurance that usually protects a normally occupied building lapses because it has become vacant, this may be replaced by purpose designed unoccupied property insurance.

This restores the level of comprehensive insurance previously enjoyed when the property was in constant use.

The structure and fabric of the building itself is once again protected by unoccupied property insurance, as are the contents, including any fixtures and fittings, or plant and machinery in the case of commercial property.

To find out more about the way unoccupied property insurance works, you might want to refer to the comprehensive guide we have published here at Cover4LetProperty, or, alternatively, watch our video.

When a property becomes unoccupied

There may be more reason than you first imagined for a property becoming empty and unoccupied:

  • if you are a home owner, your job might take you away to another part of the country, or overseas, for more than a few months at a time;
  • you might have decided to take an extended holiday to visit friends or relatives who live abroad;
  • the property may be subject to probate and remains empty until its future may be secured;
  • whether residential or commercial premises, work might be in progress for the renovation or refurbishment of the property;
  • in the case of let residential property, there might be a lull of several months between an outgoing tenancy and the granting of a new lease or tenancy; or
  • in the case of commercial property, the existing tenant may have gone out of business and you are searching for replacement tenants.

In any of these instances, your unoccupied premises remain vulnerable to risks which are not generally associated with buildings that are in continuous use.

That is the time, therefore, when you might want to give serious consideration to the importance of unoccupied property insurance in restoring the comprehensive level of protection typically enjoyed.