The importance of unoccupied property insurance may be summed up in a very simple and straight forward way.
If your property has been vacant for more than a month or more and you do not have unoccupied property insurance, you run the risk of the premises being uninsured – and, so, stand to lose your entire investment in both the building and its contents without any form of compensation.
But I already have building and contents insurance
Whether you are a home owner or have invested in residential or commercial property as a landlord, you probably paid careful attention to the insurance of the property. Indeed, if you are buying the property with the help of a mortgage, your lender almost certainly insisted on a minimum level of building cover.
Closer inspection of that insurance policy, however, is likely to reveal that if the building has been empty for more than 30 or 45 consecutive days (the exact period may vary from one insurer to another) the cover becomes either severely limited or lapses altogether. In other words, your empty building is without the protection you are almost certain to need.
Why does my cover lapse?
Insurers need to calculate risk. The simple fact is that an empty and unoccupied building is more vulnerable to more risks than one which is in more or less constant use:
- a vacant building tends to act as a magnet for trespassers, vandals, squatters and others up to no good;
- unnoticed and unattended problems with electrical or gas supplies may spark a fire; an
- even routine maintenance failures may develop into major crises if there is no one on hand to report and sort them out.
Property management specialists, VPS, have reported that up to 60 fires a day in the UK occur in empty properties, neighbouring them or on derelict sites. The website of another firm of property specialists, DTZ, also comments that as many as one in ten shops on the country’s high streets are currently sitting empty.
Unoccupied property insurance
For reasons such as this, any standard insurance that normally protects your property lapses after a certain time and why you may need unoccupied property insurance to take its place.
It is a simple and straight forward, but specialist and standalone form of insurance which here at Cover4LetProperty we have ample experience and expertise in arranging for our customers.
Reducing the risks to your empty property
Adequate unoccupied property insurance is half of the story – the other half is down to you in helping to reduce the risks. As with any other form of general insurance, any insurer has the right to expect you to take all reasonable measure to help mitigate the risk of loss or damage.
In respect of an empty property, therefore, you may be expected to take some or all of the following precautions:
- fire is clearly one of the major hazards, so you need to make sure that obviously combustible materials are kept well clear of boilers and stoves;
- utilities – water, gas and electricity – may need to be turned off and, in the case of commercial property, securely locked into the off position to prevent their being turned on by accident or maliciously;
- fire and intruder alarms may be fitted to detect potential dangers and to sound the alert if there are intruders or services have been tampered with;
- regular inspections and visits to monitor the state of security and maintenance are important whether the property is your own home, holiday home, or let residential or commercial property;
- to strengthen your position with the insurers in the event of a claim, it may be mandatory to show a written record of the visits and inspections that have been made;
- having secured and locked your vacant property, it is important that reliable key holders are found to provide access in the event of an emergency – depending on the nature of the premises, you may also need to keep a clear, written record of those key holders;
- once again, depending on the nature of the building, you might want to consider who needs to know that it is going to lie empty – apart from your insurers, these might include the police, fire brigade and utility companies, who may need to be informed of contact details for your key holders;
- an empty property still needs to be maintained and kept in a good state of repair – remembering that the risks may increase during the storms and freezing conditions of many winters.
Playing your own part and keeping your vacant property adequately protected by unoccupied property insurance may help to safeguard what is likely to have been a very significant investment in the purchase of the premises.
Further reading: Guide to Unoccupied Property.