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Covid-19: Conditions for Unoccupied Property

28th April 2020
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The coronavirus pandemic is touching every aspect of life in the UK right now and property is no exception. In this article, Account Executive Phil Smith takes a look at how an unoccupied property may affect your insurance cover in the coming months – and how you can reduce your chances of making a claim.

Unoccupied properties have always been a challenge for insurers because of the risks they face. They’re more likely to suffer malicious damage or an arson attack, for example, because there’s no one on the premises.

Of course, during the coronavirus pandemic, more properties are sitting empty than normal. With businesses and their teams working remotely, commercial properties may be unoccupied for several months, until the lockdown comes to an end.

If this applies to you and your property, here are a few points you need to know.

Unoccupied Property: Insurance Considerations

The vast majority of insurance policies that provide cover for property (i.e. buildings, contents, stock, equipment, plant, etc) state that the insurer must be notified as soon as a premises is unoccupied. This applies to all property damage policies, not just Buildings Insurance.

Insurance companies tend to cover unoccupied properties for a fixed period of time, as outlined in the policy wording. This usually ranges from 7-60 days, depending on your insurer. Check your policy wording – or speak to your broker – to establish how long your property can remain unoccupied.

After the insured unoccupied period, insurers may continue to provide cover, but the number and types of perils are likely to be reduced. They may also impose extra conditions and/or charge an additional premium, given the increased risks that unoccupied properties face.

Be aware that if you fail to tell your insurer that a property is unoccupied, you may be in breach of a general policy condition. In such circumstances, even where any period of full cover is provided, insurers would be within their rights to refuse a claim.

Of course, all policies contain different terms and conditions; the above is an overview of most standard property insurance contracts. As an insurance broker, it is our duty to highlight the potential cover implications presented by unoccupied property.

How to Minimise The Risks Facing Unoccupied Properties

There are some steps you can take to protect your property if it’s unoccupied. These will reduce your chances of making a claim.

1. Secure the site: It might sound obvious, but remember to check that your intruder alarm is set, and that windows, doors and gates are locked when you leave.

2. Protect against fire: Turn off and unplug all electrical items within your property. You should also isolate electrical systems at the main fuse board, except for any business-critical items. Any systems needed to keep your business operational, including those that support temporary remote working, should remain running. Security and fire alarms should also be left on.

3. Test it: Make sure your fire alarms, intruder alarms, sprinklers etc are all working.

4. Protect against arson: Remove any combustible waste in and around the property.

5. Water risks: Escape of water can be a costly issue. Unoccupied properties are much more susceptible to high-value claims because water can escape for quite some time before being detected. If your property is unoccupied, drain water supplies and ensure they’re isolated from the mains. Of course, if your premises has a sprinkler system, ensure this is operational because it protects the premises against fire.

6. Make a visit: Inspect both the inside and outside of the property at least once a week. Keep a written record of the inspection for your records too. If that isn’t possible right now, ensure you return to check the property as soon as you can.

7. Monitor risk: Continue to update your risk assessments or business continuity plans.

How to Prevent a Breach of Your Insurance

If your premises are unoccupied as a result of the COVID-19 outbreak – and Government restrictions – it’s important to be aware that some insurers are relaxing their policy requirements during the lockdown. Many are reviewing and extending insured periods of unoccupancy, but these conditions will be reviewed on an ongoing basis.

While this is good news, if coronavirus has left you unable to meet your policy requirements please contact us. As stated above, not only do your insurers need to be informed of the situation, but any arrangements to relax or vary your policy requirements must be agreed in writing.

To check your insurer’s position, please visit their website or give us a call. We have spoken to all of the insurance companies we work with and have a clear understanding of how any changes may affect your policy.

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