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Insurance for Unoccupied Properties

12 May 2024

Insurance for Unoccupied Properties

JCT Insurance Stand: B51

Why do you need unoccupied property insurance?

Most insurers will refuse to pay out under the terms of a standard policy, should it come to light that the property has been left vacant. This is because an unoccupied property is a higher risk than an occupied one.

An empty building or unworked site is much more vulnerable than one where people regularly come and go. It is at greater risk of damage due to fire, vandalism, water damage due to burst pipes and other maintenance-related concerns which can escalate if left unchecked. 

Whatever the reason for a property being left empty, it’s crucial that you tell your insurers about it and purchase specialist cover to protect yourself and your investment. Cover for unoccupied properties isn’t difficult or expensive to obtain but will often be needed to meet the terms of a mortgage or loan raised against the property.

What does unoccupied Property Insurance cover?

The base cover for this type of policy is for the building and its permanent fixtures and fittings, including swimming pools, paths, drives, terraces, walls, hedges, gates and fences all contained within the boundaries of your land.

There is normally extra cover against property owner's liability risks. This will typically offer between £1m to £5m cover. This provides cover for accidental death, injury, or loss/damage to third parties where you are legally liable (e.g. someone getting injured on the insure property due to your negligence).

We can normally extend your policy to include additional cover for any contents in the property and outbuildings, although insurers may impose special security conditions.

How much should I insure my Property for?

You should insure the full value of rebuilding your property, even if you intend to knock the buildings down as part of the building project. If you aren’t sure how to calculate the sum to be insured, then take a look at the ABI BCIS rebuilding cost guide https://abi.bcis.co.uk/

 

How long does a policy offer cover for?

Cover is normally offered for short periods to meet your expected work start date but could be as long as 12 months if you aren’t sure how long things will take before you get started. If you know how long it will take before works starts a 3-month policy might be more suitable, although it will cost more pro rata than a 12-month policy.

JCT Insurance Expert can offer cover for 3, 6, 9 or 12-month cover to suit all your needs. Note that these policies are normally renewable but rarely allow a return premium if they are cancelled early.

 

What is covered by an Unoccupied Property Policy?

Cover for Unoccupied properties can be very restrictive, so it’s important to check what insured events (perils) insurers are offering to pay for. The very basic level of cover is fire, lightning, earthquake and explosion or FLEE. This would only cover damage caused to the property insured by these perils and will not be suitable to meet the terms of any commercial loan or mortgage on the property.

You can opt to increase the levels of cover from the basic FLEE cover to include cover for “Wider perils” or “Full Perils”. Wider Perils is a reduced form of the Full Perils cover as it covers the same perils excluding escape of water, theft, attempted theft and malicious acts. Normally lenders will require cover to be on a full perils basis.

Will there be any special conditions applied to the cover?

There will usually be endorsements applied to the policy. Endorsements are amendments to the standard policy wordings or requirements of the property owner that must be met for insurance to be valid. For example, inspecting the property once a week and keeping the heating on during the winter.

If you choose JCT Insurance Expert to advise you on Unoccupied Property Insurance, we will clearly explain any applicable endorsements or conditions to you before you buy the cover.

Get a Quotation

For a quotation, help or advice call JCT Insurance Expert on 01825 745 410 or email enquiries@eig.email

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