The problem with your existing policy

Insurance advice for unoccupied property owners

Your empty home or premises may already have an insurance policy in force, and it’s easy to assume that the existing insurance policy will be sufficient until the renewal date.
However, a standard household insurance policy will not provide adequate cover on a home once it has become empty.

Take a look at this sample taken from a policy wording from one of the biggest insurers in the UK:

You must also tell us about the following changes”…
…”if your property is to be unoccupied for any continuous period exceeding the number of days shown on your schedule”(this is usually either 30 or 60 days).

In the event that the insurer is not kept up to date with complete and accurate information, they may
cancel your policy and refuse to pay any claim

So we can see that it is vital to keep the insurer informed of any change in occupancy, or a future claim might be thrown out completely.

The insurer’s response

After advising your insurance company that the property is empty, you will normally get one of a limited number of responses:

Happy to extend terms to continue full cover
This is the best outcome you can hope for. If you manage to get your insurer to continue full cover, you must ensure that they confirm in writing with an endorsement or revised schedule showing that they have over-ridden the normal exclusions which apply to a property which is not occupied and/or unfurnished.
This will either take the form of a change in the definition of ‘unoccupied’, or it will be an endorsement deeming the exclusions applying when the property is unoccupied to be deleted and of no further effect.

Remember, without a written endorsement or revised schedule showing the amendment to the wording, the standard conditions will be applied (see below).

Happy to continue cover on standard terms

Beware! This will mean that although the insurer has accepted the fact that the property is unoccupied, they are continuing your cover on standard terms ie. the policy wording is unchanged and normal terms and conditions apply.
What does this mean?
Well, the usual restrictions to cover are as follows:

Excluded – Theft
Excluded – Malicious Damage
Excluded – Burst pipes
Excluded – Escape of water
Excluded – Escape of oil
Excluded – Accidental damage

As you can see, the insurer has effectively avoided any responsibility for the very things that are more likely to happen when a property is unoccupied, thereby handing the increased risk back to you. Unfortunately, unless you are extremely wealthy, a serious incident at the property could leave you in financial ruin.

Continued cover agreed, restricted perils

You may find that an insurer will agree to continue cover, but will provide restricted perils cover only. These are usually:

Fire
Lightning
Explosion
Earthquake
Aircraft (check insurer’s documents as sometimes not included)
Subsidence (check insurer’s wording as sometimes not included)
Property Owners Liability

The list above will give you cover for disasters only, and you could be forgiven for thinking that the ‘main disasters’ are insured. Fair enough, but could you handle a burst pipe or vandalism claim of over £75,000? If not, it would be a good idea to start looking for alternative cover.

Your business is no longer acceptable. Go away.

Unfortunately, this is the response many unoccupied property owners will receive.
However, it is preferable to be forced to look elsewhere than to carry on in blissful ignorance, not realising you’ve got a policy which is not worth the paper it’s written on.

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