Who needs unoccupied property insurance cover?

Posted: 18th Nov 2018

Your property may be unoccupied for periods of time.

In terms of your insurance cover that might not be an issue – but it may become one. If your property stands unoccupied for more than a specified number of consecutive days, your buildings and contents insurance could be at risk.

Our Cover4LetProperty guide highlights the issue and offers options to resolve it.

What is unoccupied property insurance?

What is empty property insurance – and who needs it?

Insurance providers look to understand the risks they are covering when they offer you a policy.

Should the risks they are covering change, they also typically require the opportunity to reconsider the suitability of the existing policy. If the risks change sufficiently, they will reserve the right to state that the existing policy can no longer apply and that something more suitable needs to be put in place.

This basic principle applies to all insurance – including property cover.

If your property moves into what is called “unoccupied status”, the risks associated with it will typically change sufficiently to justify the insurance provider requiring a different form of cover to be put into place.

If you fail to notify them that such a change has taken place and subsequently make a claim against the original policy, your claim may be refused.

When risks change

Homeowners

When a property is unoccupied, there is typically going to be a significantly higher risk of things such as burglary and vandalism as well as relatively minor problems (e.g. a leaking pipe) going unnoticed and as a result, turning into very major problems.

At Cover4LetProperty, we know that sometimes the question of empty versus unoccupied property status can cause a little confusion for some property owners.

To be clear, the reason your property is unoccupied doesn’t matter in terms of a typical buildings insurance policy. You will typically need to take action to protect your interests in cases such as:

  • the death of a relative means you’ve inherited an occupied property – whether it’s furnished or empty – since you may also be legally responsible to protect the value of the property if you’re an executor of a will;
  • you are going to be working away from home for several months or so
  • you are taking an extended holiday for a similar period of time; or
  • you are remodelling or refurbishing your property and need to move out for the duration of the works.

Buy to let landlords

If you are the landlord of buy to let property, one of the last things you want is the so-called “void” – the period of time during which there is no tenant in the residence, and therefore no rental income on which your business relies.

But there may be occasions when that state of affairs is unavoidable, if for instance:

  • you have bought a previously abandoned property and are looking to refurbish it before letting to tenants;
  • the buy to let property you own is currently being refurbished, extended or remodelled and needs to be left vacant whilst the works are in progress and you’re unable to let the property when planned due to over-running re-decoration or other works;
  • there is a longer than usual interval between one set of tenants leaving and new ones moving in and your new tenants have notified you at the last moment that they won’t be moving in;
  • you are planning to sell the property and want to offer vacant possession to any new buyer.
  • your tenants have notified you of their intention to take an extended overseas trip for business or pleasure purposes; or
  • it’s proving difficult to find tenants – for whatever reason.

Reasonableness

Of course, insurance providers understand that a property cannot be occupied 24X7.

That is why both owner-occupier and landlord insurance policies will usually make some allowances for insurance cover to continue when the property is unoccupied for shorter durations. Those shorter durations normally include situations such as holidays, tenant changeovers, business trips and so on.

While this is reasonable and reflects real life, policy providers typically restrict the unoccupied cover included in a standard property policy to a specified maximum number of consecutive days. That figure is usually somewhere in the range of 30-45 days.

Once a property stands unoccupied for longer than that specified number of consecutive days, it will become formally classified as “unoccupied” and will require specific unoccupied property cover going forward if continuity of protection is required.

Control

It is extremely important to note that the reason your property has become unoccupied will typically not be a consideration.

It doesn’t matter whether you have experienced delays in finding new tenants or as an owner-occupier, you have been detained unexpectedly overseas on an extended business trip. In both cases, you will typically need unoccupied property cover in order to protect your interests going forward.

A specific point for landlords to note is that even in situations where tenants are continuing to pay rent as normal, if they have left the property unoccupied whilst they are taking an extended holiday, for example, or lengthy business trip, the same basic conditions will apply.

The basic principle here is that whether or not the circumstances were under your control, the unoccupied property clause will typically apply.

In other words, a standard home insurance policy, or typical landlord insurance policy will only maintain its full protection of your property for a specified maximum number of consecutive days without someone in residence. There may be some variation here from one policy to another but typically that period ranges from 30-45 consecutive days.

In terms of insurance, your property may become formally unoccupied in the eyes of your insurer once it passes that specified number of days without anyone living there.

So, who needs unoccupied property insurance?

Once your property becomes defined as being formally unoccupied by your policy, elements of the cover provided might typically change or cease.

That could leave you exposed in terms of the totality of your financial protection.

It happens because insurers broadly regard an unoccupied dwelling as being at higher risk of certain types of peril than those that are occupied. For example, it’s generally recognised that unoccupied properties are far more attractive to criminals, such as burglars, than those with people in them.

As a result of these increased risks, your insurer will limit the period of time they’ll maintain full cover on your house once its unoccupied. A standard policy’s cover will usually be sufficient to cope with a normal duration holiday and most tenant changeovers but it’s important to take steps to protect your interests if you look likely to exceed the specified number of days.

If it does – or appears likely to – that is when you need to compare empty property insurance policies and consider arranging unoccupied property insurance online.

Unoccupied property insurance

It is essential to compare unoccupied property insurance, since specific policies are available to help maintain your protection in situations when the premises are left vacant, such as those described above.

Unoccupied property insurance shouldn’t be regarded as just nice to have because any claim you make may be rejected due to the property concerned being unoccupied without appropriate insurance cover in place.

Note that unoccupied property insurance typically brings with it certain conditions relating to specific obligations the policyholder may need to comply with such as making regular, logged visits to the property for inspections etc.

It’s worth noting that in some cases, such as if your property is undergoing extensive renovation and building work, it may be advisable to consider specialist renovation insurance. We’d be only too happy to advise you on that and would welcome your call or email contact for a further discussion.

The risks to empty property

Finally, when you come to compare unoccupied property insurance, it may be helpful to review some of the many risks to which any empty property is exposed:

Theft and vandalism

  • an increasing number of residential and commercial properties are becoming vacant say property managers Ryden;
  • the specialists warn that when premises are empty, they attract more than their fair share of vandals, squatters, arsonists, fly-tippers and graffiti artists, eventually leading to such a decline in overall security in the area as to encourage its general decline;

Maintenance and repair

  • when there are no tenants in your property, problems needing otherwise routine maintenance and repair are going to go unreported and may therefore develop into full-blown incidents – a dripping tap, for example, might soon leave the property flooded;

Weather

  • the British weather is nothing if not unpredictable – and when your property is unoccupied, storm damage, high winds, ice or snow may cause problems which are again unreported and have the potential for causing considerable damage;

Infestations

  • a property that is left empty and unoccupied may be at much higher risk of infestation by rodents or other pests – with the onset of colder weather, in particular, says an article in On the Market on the 29th of August 2018, unoccupied property is especially vulnerable to infestations by mice and other rodents;

Insurance

For all of these reasons of heightened risk and vulnerability, insurers are likely to reassess the scope and level of cover for your property once it has been unoccupied for a given length of time – this may be between 30 and 60 consecutive days, depending on the insurer of your home building and contents or your buy to let property.

Once the property has been unoccupied for the prescribed number of days, the insurer may restrict the level of cover offered or regard the policy as lapsed altogether.

Unoccupied property insurance is needed by any property owner in search of standalone cover to replace your regular home or buy to let insurance whilst the property remains empty.