There are a number of sources to which it might be quite natural to turn for advice – think of the police, the fire services or even the suppliers of energy needs and utilities.
Of all the potential sources, however, one of the most important and critical is likely to be your insurance provider. That is why here at Cover4LetProperty, we have published a guide which addresses precisely this issue of unoccupied property.
Recognising unoccupied property
Whether it is commercial or residential, your property does not need to be abandoned and derelict before it is defined as unoccupied. Indeed, as far as most insurers are concerned, the premises become unoccupied once no one has been living there or continuously using the premises for between 30 to 60 consecutive days – the precise interval may be defined differently by different insurers.
Whatever the precise interval, and whether the premises are resident or commercial, owner occupied or let to tenants, once it is passed most insurers limit the extent of cover offered or even remove cover altogether.
If an incident occurs after that period – and the property is defined as unoccupied – you may find that the cover which normally offers you protection against a wide range of risks and perils is no longer valid.
Recognising why property is unoccupied
There are a number of reasons why a building may be temporarily unoccupied:
- one of the most remarkable may be the phenomenon which is described in the Telegraph newspaper on the 2nd of December 2015 as “buy to leave” – where an investor calculates that the cost of wear and tear from having tenants on the premises outweighs the potential income from rents;
- rather more widespread – and shorter term the vacancy – might arise during extended intervals between one tenancy finishing and before new tenants move in;
- the building might be in the process of extensive refurbishment or renovation and remains unfit for occupation whilst building works are in progress;
- a brief contract working in a different part of the country or abroad might mean leaving the home you own empty and vacant for the duration;
- you might have moved house and your former home remains empty until you are able to sell it; or
- you might have a share in the inheritance of a property and are waiting to agree with your co-owners quite what to do with the asset in the longer term.
These are all circumstances in which you are likely to find that the building and contents insurance normally protecting the property becomes severely limited or expires altogether.
The risks and perils
Why does an insurer normally quite content to offer cover, choose to remove it when the property is temporarily unoccupied?
As with most issues connected with insurance, this is all a question of the assessed risks and perils – and in the case of empty property, these are considered to be much greater than those faced by a property which is in continuous use as a home or place of business.
There are a number of reasons for the heightened risks, the most notable of which might be due to:
- an empty building being at greater risk of a minor fault or maintenance problem developing into a full-blown emergency if no one is immediately on hand to detect the problem when it first occurs; and
- the invariable attraction of an empty building to all manner of unwanted attention from individuals such as vandals, squatters, fly-tippers and arsonists – according to an article in the Facilities Management Journal, vandalism and arson gives rise to some £2 billion in claims each year, with about a quarter of those claims coming from owners of temporarily unoccupied premises;
- added to this is the loss and damage caused by the theft and attempted theft of metal radiators, copper pipes and electrical cables from empty property.
What does cover?
Essentially, the choice is yours when arranging your unoccupied property insurance. Depending on the circumstances of the vacancy – and the value of its contents, for example – you might choose relatively basic cover. If it is your home, or a property which you may soon be returning to normal use, however, you might prefer a level of insurance which offers fully comprehensive cover.
Many unoccupied property insurance policies are also sufficiently flexible to allow you to define the period of vacancy – so that you avoid paying for a whole year of cover if it is unoccupied for just a few months – and which may extend cover if the vacancy runs longer than you first anticipated (if building works are overrunning their original deadline, for example.
Playing your part
It is important to remember that any insurer of your empty and unoccupied property is also entitled to expect you to play your part in mitigating the risks of loss or damage – by maintaining the property in a good state of repair, for example, with appropriate levels of security and through regular, recorded inspections.