Unoccupied Properties and Insurance – what you need to know

The first question that needs answering is ‘What IS an unoccupied property’? And, like most things in the wonderful world of insurance it’s not a straightforward answer.

Strictly speaking, a (residential) property is unoccupied/vacant as soon as it’s not being lived in. People always visualise an empty property as looking like a haunted mansion with creaking windows and overgrown gardens – ideally with a ghost or a body under the patio, but realistically, an empty property is usually simply one where the previous tenant has moved out and it hasn’t yet been re-occupied. Properties where the owner has passed away and the estate is going through probate are also classed as unoccupied, as are properties where the owner has had to go into a Nursing Home and the house has got to be sold to pay for the care fees.

Once the property becomes ‘unoccupied’ insurance companies start the clock ticking. Some insurers (the generous ones) will then continue to give you full cover for as much as 90 days, but, beware, some insurers will instantly restrict cover and impose quite stringent terms.

The cynics amongst you will simply say – don’t tell the insurance company – then they can’t impose punitive terms! Great theory – but lousy in practice, because in the event of a claim the insurers will automatically ask when was the last time the property was occupied and will start the clock from that date.

Let me give you an example. The tenant moves out on the 31st January and sometime around the 3rd March a water pipe bursts flooding the downstairs. So, on the 9th March you pop in, discover Armageddon and call the insurer/broker. They send out a Loss Adjuster to assess the damage and with the intent of getting it all sorted, but, then the brakes come on because he/she realises the property isn’t being lived in. The question is then asked about occupancy and for proof they want to see the rental agreement. Once it’s discovered the tenant moved out several weeks before, the Loss Adjuster refers back to the insurance company, who in turn, refer to the policy wording.

Now that’s where it can get interesting but also potentially very expensive for the policyholder because, have the policy terms been complied with? The policyholder immediately asks WHAT terms & conditions and are referred back to (say) page 47, paragraph C to read the small print…

So what does the small print say?

It may say anything from, you’ve only got FLEA (fire, lightning, explosion & aircraft) cover from the moment the property is unoccupied, right up to you’ve got full cover for up to 90 days after the last occupant moves out.

But it doesn’t stop there… it’s usually a condition of the policy that the property be checked regularly and a log be kept, or the water be turned off and the system drained, or the services all be turned off. Under some policies the electrics will need to be checked too – and please, don’t do that yourself, get a qualified electrician to do it – if you’re stuck, ask your brokers, they are bound to know one!

So what do you do need to do? Well for starters, download the attached  Unoccupied Property Check List and complete it EVERY TIME you visit the property. And how do you know how often to visit? CHECK YOUR POLICY or speak to your broker/insurer.
So what happens if your property is likely to be empty for a long time? Well, if your existing insurer can’t help you, there are several specialist policies which are available which are specifically designed to cover empty houses. They can provide cover for a wider range of perils – impact for example, as well as storm, flood, earthquake (!) as well as the really important ones – escape of water & malicious damage.

It’s usually a condition that the property MUST be regularly checked & the locks be up to a certain standard, details of which will be provided with the quote.
There are many other things you can do to reduce the risk of your property being targeted. For example; mow the lawns, redirect post, use timer lights, remove external rubbish, put the bins out regularly, repair any obvious damage – in essence make the property look lived in. Make it look loved!
Don’t forget a house insurance policy also provides liability cover, so even if you don’t think the bricks & mortar are worth insuring, it’s always worth keeping some liability insurance in force because a property owner has a legal responsibility (a duty of care) to visitors – be they welcome or unwelcome… if you’re ever bored look up the Occupiers Liability Act 1984 and that’s when you’ll discover that you have a legal duty of care to trespassers…!

So now onto the crux of the matter, what’s it going to cost you?

Empty properties are always more expensive to insure – quite simply because they are more vulnerable and more likely to be damaged than a property that’s lived in.
Saying that, the costs are not frighteningly expensive. Recent examples we’ve sorted for clients include a property which had been empty for 2 months which we’ve insured for £200,000 for a 6 month period for £350, and a property which had been empty for 4 years which we’ve insured for £75,000 for a 3 month period for under £200 inclusive of tax.
But, like all house insurances, we’d need to know what sort of property it is, when it was built (approximately), its postcode – all the usual ‘stuff’ insurers need to know. And then, in most circumstances we can send you your quote across within an hour or so.

I hope this helps. The biggest single thing you should do is as soon as your property becomes empty IS TELL THE INSURERS and ask them a) what you need to do and b) what cover is in force and for how long. If you’re stuck and we can help – just drop us a line!

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