Why are your needs different for unoccupied buildings?
Insurers consider vacant properties to be at greater risk of peril as they do not benefit from the daily supervision and maintenance of fully occupied tenants. Statistics have shown that empty properties can be targeted by arsonists, squatters and, more generally, be at greater risk of malicious damage claims. As the building is not occupied, very often the ‘unoccupied conditions’ of property policies state that certain precautions need to be taken by the property owner, such as turning off utilities, inspecting the building at agreed intervals and having minimum security in place.
Why can it be challenging to arrange insurance for empty properties?
Vacant properties can lead to a greater chance of claims, and for that reason many composite insurers – who mostly vie for standard, run-of-the-mill risks – are less willing to cover such properties. Short-term unoccupancy presents less of an issue if there are definitive plans afoot for securing a tenant; however, any time period over 3 months is likely to be considered more of a problem as there is a greater chance for claims to result from the extended property vacancy.
How does cover change on unoccupied properties?
Within the insurance industry we encounter terms such as FLEE, FLEA and FLEE+. These abbreviations are very common across insurers and apply when a property be empty for longer than a short period, such as 3 months. What this cover restriction means is that only a select number of perils will be covered, such as Fire, Lightning, Explosion, Earthquake and Aircraft/Impact.
In other words, perils such as Malicious Damage, Theft, Subsidence, Flooding and others are excluded unless there is a strong argument – such as very strong risk management features – for the property to be extended wider cover than just on a FLEA-basis.
What is the difference between a vacant house and an unoccupied house?
Vacant refers to a property that is completely empty, so without people and personal items. However, unoccupied refers to a property that has been left in a state where all items are left as though the owners will return at some point.
What counts as an unoccupied business?
Your business may be unoccupied for a number of reasons. You may have just purchased the premises as an investment, you may be between tenants, or we saw a number of unoccupied properties during the pandemic lockdowns. If your premises is empty, is it important you speak to your insurer to ensure your policy fully covers you in the event of a claim.
What measures should I put in place to protect my unoccupied business?
It is sensible to inspect your premises regularly and keep a record of your visits. Physical security must be checked, and this should be maintained and activated at all times. Take precautionary steps and remove any fire risks such as paints and oils, or gas bottles.