Unoccupied property insurance explained

Posted: 23rd Apr 2019

Homeowners and landlords alike need to pay attention to the benefits and security offered by unoccupied property insurance – and here we’ll explain just how it works to provide continued protection for the home or buy to let property in which you have invested.

You might want to read this in tandem with our comprehensive Guide to Unoccupied Property, which further defines the issues of empty and unoccupied property and your need for adequate insurance.

If you are more comfortable with an audio-visual reminder, take a look at our video entitled “Do I need a specialist unoccupied property insurance policy?”.

Are you a landlord?

Unoccupied buildings insurance may be an invaluable part of your landlord insurance portfolio.

This may come as a bit of a surprise to you. You may think, for example, that your buy to let property is more at risk when you have tenants living there. After all, why else would you have bought buy to let house insurance?

Tenants are only part of the story though, because when your property is empty it may be more vulnerable to different types of risk.

The risks

Although it may not immediately seem obvious, an unoccupied property may be at rather more risk than one that is occupied.

That’s because there are a variety of things that may happen to it, that may be less likely if someone were living there.

Examples of the sorts of issues might include:

  • minor problems (e.g. leaking pipes) that deteriorate into major catastrophes simply because nobody is there to spot and quickly deal with them;
  • burglars typically like to avoid the risk of being disturbed, so unoccupied properties may be far more attractive to them than those that are occupied.

For all these reasons, the providers of buy to let buildings insurance (or owner-occupier home buildings and contents insurance) may not cover a property that stands unoccupied for more than 30-45 consecutive days (the actual amount of days depends on the individual insurer, so you may wish to check your policy).

Reasons why your property might be unoccupied – landlords

No landlord wants their let property to be unoccupied – you’ll be losing rental income after all – but there are occasions when such voids may be inevitable:

  • you might have difficulties finding new tenants to take over the property or delays in them moving in;
  • major refurbishment is being carried out to your let property;
  • the property is undergoing renovations or repairs, the project might overrun, and all the time the building stands empty.

There may be people coming and going about the property on most days but if no one is living there then it will generally need unoccupied buildings insurance (also known as empty property cover or vacant property insurance).

From the insurer’s point of view

Although it may be advisable to check your own individual policy for exact details, typically insurers will not take into account why your property is unoccupied.

It may be that you were unlucky and had an extended gap between lettings or perhaps your property was unoccupied while it was being converted and redecorated.

In essence, it won’t matter – the insurance company will simply typically see it as unoccupied and they may reject any claims for problems that arose while it was officially designated as an unoccupied property.

The good news is that insurance providers will typically be able to offer you something called unoccupied property insurance (or vacant property insurance). That will cover your property should it stand empty for more than 30 consecutive days.

Some providers may offer unoccupied property insurance cover providing certain conditions are met. They may include things such as your need to periodically visit and inspect the property and to keep a log of the dates and times that you did so.

If you think it is possible that your property may stand unoccupied for more than the 30 days mentioned above, it might be highly advisable to consider this sort of additional cover.

Reasons why your property may be unoccupied – Owner-occupiers

If you own your own home, there may be occasions when unoccupied property insurance becomes equally important to you, too.

Your home might be temporarily empty and unoccupied:

  • as a result of you being on a long term assignment abroad;
  • while under probate;
  • awaiting the outcome of divorce proceedings; or
  • while you are carrying out renovations.

Insurers’ 30-45 day rules on unoccupied property continue to apply. So, if you are planning an extended holiday or business trip overseas, it might be prudent to consider whether or not the duration may affect the validity of your property insurance.

It is also worth taking note that an insurer may check the occupancy status of a property in the context of a claim. If your property was found to be unoccupied (i.e. for more than 30-45 consecutive days) then your claim may be rejected unless you have unoccupied property insurance cover.

Tell-tale signs and what you can do

As we have mentioned, for vandals and thieves, unoccupied property may be an especially attractive proposition. Overgrown gardens, unlit windows and building materials lying around, are all good indicators of an unoccupied property – and your need for unoccupied buildings insurance.

Trying to keep your home or buy to let property looking lived in may help as a deterrent in many cases. This could entail keeping the garden tidy and the grass cut or arranging for lights to come on at night.

Your neighbours or even the most unreliable of tenants may probably intervene if there was a problem with your house – so, you would catch that small leak or missing slate early before they got worse and caused possibly significant damage to the fabric of your property.

Making regular inspections of your property and carrying out necessary repairs may help prevent a minor problem turning into a major and expensive disaster. You may find in any case that regular visits to your unoccupied property may be obligatory as part of your empty property insurance.

Unoccupied property insurance – is it worth the expense?

Nobody likes the thought of needing to buy additional insurance. Yet cheap unoccupied property insurance might be something that is well worth taking seriously.

Here’s why:

  • whether you are an owner-occupier or a landlord, your buildings and contents insurance will typically only cover your property if it is defined, in insurance terms, as being occupied;
  • as we have explained, if a property is empty for more than 30 consecutive days, then your insurer will typically define it as being ‘unoccupied’ and any existing home buildings and contents insurance (either owner-occupier or landlord’s insurance) to be invalid;
  • insurers may regard a property that is unoccupied to be at higher risk from things such as cumulative damage arising from a leaking pipe or broken window. There may also be additional risks from things such as burglary and vandalism, as the perpetrators often have techniques they use to spot an unoccupied property (which reduces the chances of them being disturbed while engaged in their criminal activities);
  • properties may slip into this designation more easily than you would think. Examples might include unexpected delays between lettings or renovation and conversion works overrunning etc;
  • there are insurers offering what they may call cheap unoccupied property insurance to provide a continuity of cover should your property slip into the unoccupied category;
  • to be clear on definitions, an unoccupied property is one that is, as the name suggests, simply unoccupied – it does not have to be empty in the sense of its being unfurnished. It is perfectly possible for a fully furnished and well-equipped property to meet the definition of being unoccupied;
  • not all cheap unoccupied property insurance is identical and there may be significant variations between the products of various insurers. For example, most unoccupied property insurance may require that you periodically inspect the unoccupied property and keep a log that you have done so. Some cover of this type may also insist that certain anti-intruder measures are adopted including the maintenance of external features such as gardens and the fitting of time switches to lights etc;
  • it may also be worth noting that typically insurers will not consider any justification for a property being unoccupied. In other words, if you do not have unoccupied property insurance cover and your property passes the 30-45 days unintentionally (e.g. if you are delayed letting your property because of family troubles) then your insurance may still become invalid.

Given the sums that you have invested in your property, taking chances in the area of unoccupied property insurance might not be advisable.

Of course, what is cheap empty property insurance for one person may not be cheap for you and you may prefer to adopt an approach that concentrates on the depth of cover provided rather than exclusively on finding cheap unoccupied property insurance.

Consider the price

Of course, you are likely to consider the price of the premiums when comparing unoccupied property insurance and settling on a particular policy to buy. But we would stress that price alone is not your only consideration.

The single most important aspect of your buy to let insurance is typically the cover it provides and the financial protection that comes with that.

Although the imperatives of saving money are ever-present, it is still typically advisable to concentrate on trying to ensure that your home or landlords insurance in total, including unoccupied property cover, offers you a range of benefits that are suitable for your individual situation.

Inevitably, what is cheap for someone else may prove to be unsuitable and therefore not cheap, for you.

So, while the search for the cheapest unoccupied property insurance may be understandable, all of the factors that we have considered in this article need to be kept in mind at all times.