What is it that makes the insurance of an unoccupied or empty property such a special case?

There is little doubt that empty properties are considered to be in a special category as far as insurers are concerned, so just why is insuring an empty property such a special case and what is the reason for purpose designed unoccupied property insurance?

The risks

Insurance is all about the calculation of risk. When it comes to empty property, it is generally – and quite understandably – considered that those risks are greater than a property which is lived in or otherwise in more or less constant use.

Those reasons may be quite apparent, since an unoccupied property:

Is more likely to be vulnerable to otherwise quite routine maintenance issues rapidly deteriorating into a major crisis if there is no one on hand to detect and report the need for emergency attention; and

An empty property, whether normally in residential or commercial use, tends to act as a magnet for all manner of unwanted attention from vandals, squatters, fly-tippers, and even arsonists – the Facilities Management Journal, for instance, has reported that as high a proportion as 25% of all vandalism and arson insurance claims concern unoccupied buildings.

The insurers’ response

In response to evidence such as this, insurers typically reduce or remove altogether the cover that may have been in place to protect your property if it has been unoccupied for longer than a given period of time – this might be anywhere between 30 and 60 days, depending on the particular insurer concerned.

A common reduction in cover, for example, is known by its initials FLEA and leaves the empty property covered only against fire, lightning, earthquake and aircraft (impacts). That is to say, the building and its contents remain vulnerable to a wide range of other risks and an incident that led to serious damage or even the complete destruction of the property might leave you very sorely out of pocket.

Unoccupied property insurance

Unoccupied property insurance steps in and plugs the gap when the cover which usually protects the building and its contents is no longer effective. If the vacancy is going to be longer than a month or so, it may help to remove any doubt that it continues to be protected by insurance cover.

Not only is this in your own interests, but many mortgage lenders insist on there always being adequate buildings insurance in place – and if you are going to be leaving it temporarily unoccupied, therefore, empty property insurance may provide the answer. (Read our Guide to Unoccupied Property here for further information).

It is the kind of cover in which we have particular expertise and experience in arranging here at GSI Insurance, where you may find a policy that might be tailored to the period for which you are likely to be away and the property empty. This avoids you having to pay for insurance which extends for the full year, if you are only going to be absent for six months, say.

If it turns out that the property if likely to be empty for longer than you first anticipated, unoccupied property insurance typically has sufficient flexibility to be extended for the required additional time span.