You made sure to arrange the building and contents insurance for your home, let or other commercial premises you own. So the property’s perfectly safe. Or is it?
When you last renewed your property insurance did you consider the possibility of it standing empty and unoccupied for a while – intentionally or otherwise?
Did you give any thought to unoccupied property insurance or unoccupied commercial insurance?
Why may a property be empty?
There are many reasons why your home or commercial premises may become temporarily unoccupied:
Residential property
- you might have the builders in and need to vacate while they do their work;
- you might be fortunate enough to take an extended holiday – to visit overseas friends or relatives or to take that long-planned world cruise;
- you might need to work away from home for several months – and taking the family with you leaves your home empty and unoccupied;
- you might have an interest in a property that is currently subject to probate and must await the completion of that legal process before a decision to occupy or sell;
Commercial property
- similar considerations apply to any commercial property you might own;
- closure or vacancy might be necessary during any major expansion or remodelling;
- certain emergencies might lead to the closure of your business premises – the successive lockdowns during the Covid pandemic are a case in point;
- financial difficulties might have forced you to temporarily stop trading and close the premises pending an upturn or a decision on your future property ownership.
Why is empty property insurance needed?
So, what happens to your regular home or commercial property insurance during these periods when the premises are empty and unoccupied?
After a relatively brief period – of between 45 and 60 consecutive days (it varies on the insurer) – your existing property insurance will be reduced or even become void.
This is because practically every insurer will significantly reduce or even remove the cover previously in place when the property was occupied or in use. With any cover lifted, of course, your property becomes a special risk of loss or damage.
Why do insurers restrict or remove cover for an empty or unoccupied property?
Many of the reasons are described in our Complete Guide to being a Commercial Property Landlord – and they all boil down to the increased risk faced by any property (commercial or residential) that is empty and unoccupied.
The Complete Guide explains that any empty and unoccupied building tends to act as a magnet for all kinds of unwelcome attention. This from the likes of squatters, fly-tippers, burglars, other intruders, and even arsonists.
Further risks arise because an unoccupied home or commercial property is vulnerable to loss and damage caused by otherwise relatively minor maintenance issues – such as a dripping tap or electrical fault – that can turn into a full-scale emergency when no one is there to spot the danger in time.
Because of these risks from crime or maintenance issues, insurers restrict the cover they offer or treat as lapsed altogether. That leaves your property unprotected when protection is most needed.
To restore the necessary protection, specialist, standalone unoccupied property insurance is required for your home or commercial premises.
Not all risks may be covered
As we explain in our Guide to Unoccupied Property, empty property insurance may include full cover for up to many more days than that stated in your standard policy. Short-term flexible cover is also typically available from some providers.
Nevertheless, it is essential to check exactly what is covered in any unoccupied property insurance policy because all will differ to some degree. Some policies, for example, may not cover the risk of arson or the theft of contents of the building.
What does unoccupied property insurance cover?
Unoccupied property insurance broadly restores the full range of cover you usually enjoy with your home or commercial premises insurance policy – including the risks of loss or damage to the structure and fabric of the building and its contents.
The level of cover available may vary, so you can choose whether to have just the most basic of cover or enjoy full peace of mind with comprehensive cover.
Therefore, the risks covered may typically include fire, storm damage, escape of water, flooding, and so on.
Exclusions
As with many other types of general insurance, unoccupied property insurance also incorporates exclusions – and it is important to understand exactly what these are.
The detail will vary from one insurance policy to another and may also be reflected in the level of unoccupied property insurance you choose.
Summary
Avoid any false sense of security that your home or commercial premises remain adequately protected and covered by your regular insurance policy. The risks change significantly once the building and its contents have been left empty and unoccupied for longer than a month or so. Because of that change in the risks, insurers typically restrict cover or treat it as lapsed altogether.
The response – and one that will restore the necessary protection to your temporarily unoccupied home or commercial premises – is, depending on your property type, unoccupied property insurance or unoccupied commercial insurance.
