Unoccupied properties require specialist insurance. You can’t insure them on a home or landlords insurance policy and hope that they pay out if a claim arises, as insurers view empty properties as a higher risk.
Why? Simply because there will be nobody around to deal with any problems. This is also the reason all unoccupied property insurance policies insist on a warranty where the building has to be inspected regularly. Usually this is at least once every 7 – 14 days, depending on who you are insured with. This can be a problem if you live some way away from the property, and you don’t know anyone local. In circumstances such as these, it is best to contact a local letting agent, who can inspect the property regularly on your behalf for a small monthly fee.
At this point it is probably worth mentioning that just about all empty house insurance policies also specify the heating system must be either drained completely, or kept on permanently at 13’C. This is to avoid pipes freezing in cold weather. Not only is it a sensible thing to do in it’s own right, but insurance companies often take the view that a claim that could have been reasonably foreseen and easily avoided in the first place, is a claim they can reasonably turn down. In fact, during the recent cold weather snap where temperatures plunged as low as -10’C, this is precisely what happened, with many policy holders finding frozen pipe claims being declined on this basis.
With regard to charges, unoccupied buildings are rarely empty for exactly 12 months at a time, and frequently they are empty for much shorter periods than this. High cancellation fees could mean that a policy that initially appears to be cheapest might end up costing you significantly more than another policy with better cancellation terms. Often insurers offering empty property insurance require full payment up front, and many will keep at least half the premium upon early cancellation.
Alternatively, depending on what you are going to do with the property, many of the insurers that offer unoccupied property insurance policies, do also offer home insurance and residential let policies, so you may be able to simply swap from one policy type to another without penalty, so long as your policy stays with the same insurer.
Many vacant properties are empty because the owner has chosen to develop them, and this is often a stumbling block for insurers. How do you effectively insure a building that several strangers (i.e. builders and other contractors) may have unlimited access to? And how do you insure against damage when parts of that building may be under going quite serious alteration? The simple answer is to limit cover, usually to FLEEA cover, or variations of it, and exclude such cover as theft, escape of water, and damage caused by contractors who should have their own liability insurance anyway.
Is there anything else I can do to cover my property if I’m renovating it? Yes there is. As mentioned earlier, any contractors you use should have their own public liability insurance. It is common practice within the construction industry for corporate customers to request a copy of a builder’s liability insurance schedule, and this is becoming increasingly common among private customers, so don’t be afraid to ask for it. If they won’t provide one, use a different contractor. You never know, you might need to make a claim.
Having read this far, it should be obvious by now, that arranging insurance for an unoccupied property can be a bit of a minefield with so many issues to take into consideration, so it is best to take professional advice. Coversure Insurance are a broker who specialise in arranging unoccupied property insurance and all of the insurers they deal with are fully authorised and approved by the Financial Services Authority, so you can use them with confidence. Their staff are friendly and professional, so if you are just after advice to begin with, why not give them a call?