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.
It’s worth reading on to be sure you’re clear as to the difference. But first, why do properties become unoccupied and when are they classed as unoccupied?
Why properties become unoccupied
There could be any number of reasons why your home or a property you own or are responsible for becomes unoccupied:
- the death of a relative means you’ve inherited a property – whether it’s furnished or empty. You may also be legally responsible to protect the value of the property if you’re an executor of a will;
- your new tenants have notified you at the last moment that they won’t be moving in;
- you’re unable to let the property when planned due to over-running re-decoration or other works;
- your tenants have notified you of their intention to take an extended overseas trip for business or pleasure purposes;
- it’s proving difficult to find tenants – for whatever reason.
In cases such as these, after a set number of consecutive days, specialist unoccupied property insurance is typically required.
Why is this?
A typical landlord buildings and contents policy (and a standard home insurance policy too for that matter) 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 days to 45 days or even 60 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 tenants being in place or someone living there. Or if a policyholder dies, any existing home insurance could immediately have reduced protection.
What are the risks that an empty property may face?
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.
When is a property classed as unoccupied?
As we touched on before, the cover which normally protects an owner-occupied residence, a buy to let residential or commercial premises 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 days to 60 consecutive days.
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 coverage on your house once it’s 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.
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.
What that means for you
Appropriate unoccupied house 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, an 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 them being turned on by accident or maliciously (excepting those utilities that are used for security purposes etc);
- 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 keyholders;
- 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 home insurance may help to safeguard what is likely to have been a very significant investment in the purchase of the premises.
What to look for in your unoccupied property insurance
First and foremost, you need to satisfy yourself that the policy provides the cover you need. Fortunately, unoccupied property insurance is generally flexible enough to be tailored to suit your particular needs – from relatively basic to fully comprehensive cover.
You might also want to consider how long you are going to need this special form of protection to last. Once again, a benefit of unoccupied house insurance is its flexibility in the period of cover you may arrange. It may be short-term cover, for example, allowing you to buy insurance for 3 or 6 months, rather than the customary full 12 months.
You might want to make especially certain that your unoccupied property insurance also provides sufficient indemnity against property owner’s liability claims – which may arise if a member of the public is injured or has their own property damaged after coming into contact with your empty property. Indemnity of at least £2 million is typically provided. That action involves considering unoccupied property insurance.
We are experts in providing unoccupied property insurance and landlord insurance
Cover4LetProperty offers online insurance quotations and over the ‘phone for your unoccupied property insurance. we have a range of policies, meaning there is one to suit your budget and your cover requirements.
Please read our guide to unoccupied property here or view our short video entitled: Do I need a specialist unoccupied property insurance policy?