Unoccupied Property Insurance – Amy Shields discusses the options
If a property is to be unoccupied for a period of time (typically more than 30 consecutive days) then it is important to inform the insurer, as un-occupancy is likely to change how the insurer views the property risk.
Many insurers in this situation only offer reduced cover in the form of FLEEA:
However more recently some specialist insurers are able to offer varying levels of cover ranging from FLEEA only, to (almost) standard cover but with increased limits. This increased level can include escape of water, escape of oil, and storm damage to name a few.
The length of cover you require is completely up to your needs. An annual policy is 12 months, all other policies are deemed short term, the main difference with short term is that there will be no return premium if you cancel ahead of schedule. In the case of a renovation project the short term policy is more common as often people buy a property with plans to start work in the next few months but will not be living in the property during this time. A renovations insurance policy is not able to start until the works do, leaving a period of no cover, this is where you would take out the short term unoccupied cover. However, if for example, you take out a 12 month policy and the property then becomes occupied after 6 months (or you sell it) and you need to cancel this unoccupied policy, then you will be entitled to a return premium (calculated on a pro rata basis).
Insurers perceive unoccupied properties as increased risks therefore they often place additional endorsements/conditions on the policy such as:
- Weekly inspection clauses
- Electrical circuits being switched off
- Water turned off/ heating in place during winter months to prevent frozen pipes
- Property remains furnished to maintain the appearance of being lived in
If a property is being renovated and is therefore unoccupied as a result, the risk for the insurer is even higher and it is therefore best to take out a renovations specific policy on the home (which we would recommend anyway). This type of policy provides all risks comprehensive cover for the existing building and the works whilst the property is unoccupied and having work done. Whilst it is possible to obtain unoccupied property insurance during renovation works, these policies will involve more complex restrictions especially in the case of a claim being made.
Make sure you understand what your policy covers
Decide how long you need cover and if it’s worth having a 12 month policy regardless
Ensure you know what you need to do to comply with the requirements