The issue of unoccupied property has gone from niche to mainstream in 2020. COVID, lockdown and the doubling in the numbers of people working from home has left an increasing number of commercial property owners with empty premises. To get an idea of the extent of the problem we spoke to one of our unoccupied property insurance specialists, Heidi Morton, and asked her what landlords and other property owners can do to protect their empty buildings.
What are the risks that owners of empty properties need consider? Are there specific ones related to business premises?
There’s an increased risk of theft or vandalism and there are problems associated with things like escape of water claims. Squatters and vermin can also be big issues – both of which can lead to further problems such as fires.
With the threat of another lockdown looming, do you think enough commercial property owners are aware of the risks associated with empty properties?
Generally there is an awareness about the increased theft risk as properties are left for periods of time without being attended, but the other risks are often overlooked but can be at least costly as a theft, if not more so. It’s because of this increased potential for claims that insurers will often seek to apply an increased premium and/or increased security measures.
Lockdown forced many businesses to temporarily close – did you see a rise in demand for unoccupied insurance cover?
Yes, we did see an increased demand but we were able to reassure most of our clients because policies often have a built-in period for unoccupancy. As the first lockdown went beyond the usual period that is allowed, we worked with insurers to extend the standard period allowed for unoccupancy with no special terms imposed. Any properties that continued to be unoccupied beyond the date lockdown was released then had terms applied. It’s really important for policyholders to understand their policy conditions. This is where using a broker to provide guidance is very helpful.
The length of unoccupancy can vary quite a lot – during lockdown no one knew quite how long it would last. How can property owners get the protection they need for the time they need it? Do they have to take out an annual policy and then cancel it when it becomes occupied again?
It depends on the type of property. Residential landlords can take out short-term unoccupied property cover or annual policies which can be cancelled or amended once the building is occupied. Commercial landlords can take out annual policies only which can be cancelled or amended as tenants move back in
Coversure Huntingdon are known as unoccupied property insurance specialists, are there any policy elements you would recommend that commercial property owners include in their cover?
We would always recommend getting a “full perils” policy, one that will cover a range of common issues – escape of water, theft, malicious damage, flood etc. It’s also worth looking at flexible inspection requirements which dictate how often the property needs to be inspected, be that every 7/14/30 days
Are there any elements that are typically not covered by this type of policy – unforced entry, major works or contractors for example?
All of those as well as squatters, accidental damage and legal disputes
Are there any simple ways in which owners can reduce risks and policy premiums on empty premises?
Absolutely, in terms of the policy people can reduce their premiums by increasing their excess and by making sure they have the correct sum insured rather than accepting blanket cover. They can also look to reduce the risk of a claim through regular inspections, maintaining heating systems and increasing basic security
What would be your one piece of advice to anyone with an empty property?
I’ll give you two: turn off the water supply and don’t assume you’re covered on your standard policy. If in doubt, speak to an insurance broker and get the help you need.
Thank you, Heidi, that’s good advice.
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