With over 200,000 homes in the UK lying empty for six months or more, ensuring they are properly insured during these vacant periods has never been more important.
Going away for long periods of time
The vast majority of insurance policies limit cover to 30 days of in-occupancy yet many thousands of policyholders incorrectly assume that they are protected under the terms of their standard buildings and contents policies, leaving a huge number of empty dwellings uninsured – and at a time when they are at their most vulnerable to theft, vandalism, malicious damage, escape of water and accidental damage.
So, what steps should homeowners or landlords take to protect their properties when they need to be left empty for over 30 days?
The first step should be to notify their broker as soon as possible to alert them to the fact that the property will be unoccupied for a longer period and to understand the implications for cover.
Why does the property need to be insured if it is vacant?
Whether a property is let or is a main residence, it is at a higher risk of vandalism or accidental damage when left empty. This means that insurers need to protect their risk and so any premium associated with insuring a home that is left empty for a prolonged period is likely to be higher or for the cover to be limited.
According to Vacant Property Security (VPS), a specialist provider of vacant, occupied and site security solutions, one of the main risks to empty properties is water, whether through water ingress, flooding or burst pipes. The Association of British Insurers estimated that the cost to insurers of the 2015/16 winter floods reached 1.2bn, with domestic flood claims averaging £50,000. Naturally, if a property is empty and not maintained, the elements of risk increase as does the implications of what happens to the water once flooding occurs.
In addition, 60 fires a day occur in or next to vacant or derelict buildings according to the Department for Local Communities and Government’s recently published data.
Other risks include vandalism, theft, fly-tipping and squatting. Although squatters are now increasingly targeting commercial premises after it became illegal to squat in residential properties in 2012, there are still 20,000 squatters in the UK. This puts long-term vacant properties at risk, potentially causing thousands of pounds worth of damage.
With figures like this it’s easy to see why a standard insurance policy doesn’t extend to empty homes and why insurers usually levy an increased premium or limit cover for properties left vacant for more than 30 days.
Which properties are at risk of being uninsured?
Properties can be vacated for any number of reasons, whether it’s a homeowner leaving in the run up to a sale, service personnel stationed overseas, or a second home left empty while the owners reside at their main home. Whatever the situation, the fact remains: unless insurers are notified, any claim on a standard insurance policy may be invalidated if the property is unoccupied for more than 30 days.
The same is true for let properties where there are fallow periods in between tenants. Mortgages are conditional on maintaining valid buildings insurance and it is the landlord’s responsibility to ensure this is the case – whether or not there are tenants living there.
Consideration also needs to be given towards the differences between private and commercial properties. The latter, such as a rural estate tenanted property will require immediate notifications to be made, for example.
What steps can be taken to insure a vacant property?
Where a property is left unoccupied for longer than the standard 30 days, or up to 60 days in some instances, it is possible to take out a specialist unoccupied home insurance policy.
This will provide cover for a longer period of time, provided that any specific terms and conditions in the policy, such as ensuring the property is checked at least weekly, are met. It is usually possible to purchase cover for three, six, nine or twelve months.
What cover restrictions are in place?
The levels of cover and the terms and conditions will vary by insurers, and according to the individual property and the duration of cover required, so it’s vital to check on specifics.
Home Protect states that the cost of cover will be dictated by a number of factors, including how much the property is worth, where it is located, the terms of the policy, how secure the property is and the reasons that the property is unoccupied.
It suggests that the premium may be higher for a property when unoccupied due to the increased risks, or that buildings cover, for example, may be limited.
Escape of Water, Malicious damage, theft, accidental damage and damage caused by vandalism are often excluded from cover, and there may be exclusions for water damage depending on the length of the term. It’s always best to check individual limits and inclusions.
What can be done to keep your empty property safe?
To reduce the likelihood of making a claim on an empty property, there are several precautions homeowners and landlords can take:
Minimise the risk of burglary or break ins: Make sure doors are windows have approved clocks and are properly secured and remove any valuables. Install an insurance approved burglar alarm. Ask a neighbour to look in on the property regularly, clear the post, put the bins out and perhaps even leave their car parked outside.
Turn off utilities: It’s sensible to turn off gas and electricity supplies during mild weather although if you have smart plugs it can pay to put lights and stereos on timers to avoid the property looking and sounding deserted.
Maintain the property: Conduct a thorough check of the property to ensure it does not look dilapidated and that there are no lose roof slates, other hazards, mould, damp or water leaks. Boarded up properties may invalidate any claim.
Review maintenance of the heating and water system: Service the boiler, check radiators and pipes for leaks or cracks and check whether water tanks and pipes are sufficiently insulated ahead of a possible winter freeze. Leave the central heating set to low during very cold spells. For long-term vacancies it might be worth asking a professional to drain the system to be on the safe side; it’s a wise precaution to turn the water off at the stopcock.
A specialist insurance broker, with knowledge of the terms and conditions and cover limits related to empty homes, will provide invaluable advice, reassurance and obtain the right level of cover to meet your needs.