Mitigating the Risk of Unoccupancy

December’s Arctic Cold Snap flagged another common issue in the world of insurance claims… that of ‘Unoccupied properties’ – or ‘unoccupancy’.

At higher risk of incidents such as frozen or burst pipes, simply because they’re empty for a period; are likely to be unheated, and there is no one around to check on them in case of an event. Something Lettings Agents are likely all too familiar with when properties are in between tenants.

What is ‘unoccupancy’?

‘Unoccupancy’ is when a property is not lived in by the owner or tenants for a period of time. Fairly innocuous, you might think, but a property not being used, lived in, or checked upon is at risk of neglect and degradation – something insurance companies have a vested interest in!

Some insurance policies stipulate that the insurer is notified of any periods of unoccupancy over 30 days - and there may even be requirements of the owner to ensure the property is properly secured, all utilities are turned off and the water is drained down. Some companies even charge higher premiums to cover unoccupied periods, to ensure against potential risks.

So, what’s covered and what’s not?

When a property is unoccupied, insurance cover is generally limited to FLEA damage (Fire, Lightning, Explosion, Earthquake) and anything outside of this thin, short list is not covered...

...which means the following standard perils are not covered when a property is unoccupied:

• Escape of water or oil
• Subsidence
• Theft
• Storm or flood
• Vandalism
• Impact

And what can you do about it?

To make sure the property is protected, and insurance coverage remains valid, if the property is likely to be empty for more than 30 days, urge clients to:

1. Review the insurance policy - before leaving the property unoccupied, to understand the insurers definition of unoccupied, plus any restrictions or requirements that may apply (regular checks, working alarm...)
2. Secure the property – and consider additional security measures, such as deadbolts, window locks, or a burglar alarm.
3. Turn off the water supply, drain down the system and disconnect the electrical supply to reduce the risk of damage.
4. Leave the heating on at a low setting during the winter as a preventative measure against freezing pipes and other issues.
5. Clean the property to reduce the risk of damage from vermin or other pests.
6. Check the property regularly to ensure it remains secure and to identify and address any problems that may arise.
7. Notify the insurance company if the policy requires you to - to ensure the proper coverage and prevent any disputes in the event of a claim.
8. Obtain additional coverage to provide extra protection and peace of mind while the property is unoccupied.

For Lettings Agents, this does present an opportunity to provide an added value service for your landlord clients – and keeps your ‘stock’ clean, dry and safe for when you need it!