Why you must have the right type and level of cover

Recently, businesses such as Poundworld, Prezzo, and even the high street favourite Marks & Spencer have all announced store closures, leading to more empty premises appearing on the high street.

Commercial premises of all types can be empty for a variety of reasons; they may have recently been purchased, be awaiting refurbishment or the arrival of a new tenant, or the previous tenant may have left or ceased trading.

When standing empty, commercial properties not only attract no rent, they are also subject to additional risks which can have a major impact for landlords, property holders, investors and developers.

If the premises are vacant for 30 days or more, regular commercial buildings insurance is unlikely to be available in the event of accidental damage, theft and vandalism.

This means that empty property such as houses, shops, retail and industrial units, factories or office blocks need to have the right type of specialist insurance cover in place.

Assessing the commercial risk

Insurers see unoccupied properties as posing additional risks from perils such as fire and flood. Unlike standard property cover, insurance for unoccupied commercial property can be more difficult to obtain, and the underwriting criteria surrounding security requirements will be stricter.

This is because if the unexpected occurs, it’s unlikely to be discovered as quickly, potentially increasing the severity of the resulting claim. Empty properties are also more likely to be targeted by thieves, vandals and squatters.

Residential properties

And it’s not just a risk that affects commercial property. It’s estimated that there are over 200,000 vacant homes in the UK, and they can be unoccupied for a number of reasons. Some are awaiting sale or probate, others are being renovated, or in some cases the owner is in hospital or has moved into residential care.

While most home insurance policies will provide cover for periods of absence from the property, this is often limited to 30 days. So, if a property will be unoccupied for a longer period of time, the owner will need a policy that specifically covers their absence and offers the right type and level of insurance protection.

Risks insured

Unoccupied property insurance policies cover a range of risks, including storm, flood, fire and theft. Property owner’s liability cover will also be included, so that if a tile blows off the roof and damages a neighbouring property, the policy would pay out.

Policies can provide insurance for three, six, nine or 12 months, or even longer.

Cover can be purchased for both the building and its contents; however, in the case of residential property, most insurers will exclude personal and valuable items such as jewellery and works of art, photographic and video equipment, expecting these to be kept with the policyholder or in a separate secure location.

The cost of cover

This will depend on a number of factors such as the value of the property, its location, state of repair and the level of security in place. Regular visits will need to be made to check on the property; insurers will expect these to be made on at least a weekly basis, and to be carried out by the policyholder, owner, or managing agent.

How we can help

Focus can provide cover for both commercial and residential premises, and has the facility to give same day cover. We are also currently running our Unoccupied Property Campaign, with extra commission on premiums over £500 and a bonus prize draw – click here for more information.