The above question can be a little more complicated than it sounds, and with occupancies having to change following the coronavirus outbreak, it’s something that will have been asked more than ever in recent times.
No brief article or blog can answer every question, and it is very much case-by-case based on your own circumstances, so having a discussion with a specialist insurer such as ourselves is the best way to get specific rates tailored to your needs.
The following points however might at least get you moving in the right direction:
Is your property empty or unoccupied?
Whether your property is ‘empty’ (as in it doesn’t have any furniture in it) or not isn’t a factor here, as the definition for unoccupied often includes properties that are unfurnished, and/or have not been lived in for over 30 days. If nobody is living in it, then the property is classified, typically, as being ‘unoccupied’. The risks associated with a property increase significantly once it’s unoccupied, which is why it is important insurers are aware, and relevant insurance is put in place.
For example, a typical landlord’s insurance policy will provide cover for an unoccupied property for up to a specified period of time. Usually, this is 30 days, but longer periods may be available, which could be worth considering if you are expecting a longer gap between tenants. Your tenants going on holiday, or short gaps in between lettings are not usually a problem, but it’s worth keeping in mind.
Once the policy passes beyond the defined period of unoccupancy, it is typical that a number of perils you would normally expect to be covered become excluded. While this may be acceptable for your circumstances, it is worth carefully checking the restrictions. In some cases, the policy may provide no cover to you whatsoever in the event of a loss.
Broadly speaking, the same considerations apply for owner-occupied properties, let properties and holiday homes.
Situations where you might need unoccupied cover
Here are just a few examples of situations where your cover might lapse due to your property being designated as ‘unoccupied’ and having passed the permitted number of days threshold:
- delays in finding new tenants / you’re let down at the last moment by tenants;
- you’ve decided to do some restoration or renovation work and you’ve moved out (or aren’t letting) until it’s finished;
- you’ve purchased a new property but there’s going to be substantial building work required before it’ll be fit to live in or let;
- you (or your tenants) are being sent abroad for 2-3 months on business;
- you’ve inherited a property from a relative and it’s on sale;
Another point worth noting is that this important insurance consideration doesn’t contain any reference to ‘fault’ or ‘intention’. Even if your property becomes unoccupied for reasons you couldn’t have foreseen or prevented, this condition will still apply.
In the event of a claim
If you are forced to make a property claim on a standard policy while the property was actually unoccupied, it may be rejected, or limited to a few perils, such as fire or lightning damage.
As part of the claim process, part of a loss adjuster’s job is to check the material facts at the time of inception, meaning there will be a high chance of the unoccupied condition being applied at the time.
Why are unoccupied properties such a concern?
Earlier on, we mentioned that the risks to a property increase when it’s unoccupied.
Generally, it is a condition of the policy that a change in occupancy status should be advised to the insurer, and since their premium is based upon the home being occupied, or lower risk, they may want the opportunity to apply extra premium or terms.
What risks increase? Typically:
- property damage due to unnoticed / un-rectified faults – with things such as water or gas leaks, electrical fires, and cumulative weather damage
If your property is currently, or is likely to become unoccupied, it is recommended that you get in contact with your current insurer to discuss what cover they can still provide for you. Generally, switching to a specialist unoccupied property insurance allows you the most flexibility, and allows you to be covered for the most perils.
You can find a copy of our more detailed Guide to Unoccupied property here.