There are many different reasons why you might need to leave a property empty for a period of time. There are also a few different terms that you might use to describe a property as empty. The words “vacant” and “unoccupied” being two of them. However, when it comes to property insurance, the definition should be clear, as they actually mean different things.
Why Worry About Insurance for an Empty Property?
Empty houses present more of a risk to insurers than occupied houses. Without a homeowner or tenant present, an empty property at risk of theft and vandalism, fire or flood damage and damage caused by squatters.
Most standard home insurance policies will only cover an empty property for around 30 to 60 days. If your house is going to be empty for more than this then you need to tell your insurance provider and check whether the existing home insurance will cover a period of unoccupancy.
What’s the Difference Between Unoccupied and Vacant?
The law defines the term “vacant” as meaning “completely empty”. This means that there are no people and no personal items within the property. This is typical of an empty unfurnished rental property, waiting to be let. Whilst the term “unoccupied” should be used to describe a property which contains possessions as if the residents were to return at any time.
Most insurance policies contain vacancy exclusions which means you might not be covered for things such as broken windows, theft, water damage or vandalism. Vacant properties are more likely to fall foul to these conditions which can affect insurance claims. So it is important to correctly determine if your property is vacant or unoccupied. A vacant home is harder and more costly to insure, requiring a separate policy. Vacant home insurance can cost as much as three times more than standard home insurance.
How Many Possessions Determine a Property as Unoccupied?
Whilst most home insurance policies contain vacancy exclusions, they typically do not include unoccupancy exclusions. In order for a property to be determined as unoccupied, there should be at least some basic furniture including a bed and working appliances such as a refrigerator and kettle, along with some cooking utensils.
More than 30 days of unoccupancy is typically considered an exclusion, but some home insurance policies will stipulate a shorter length of time, while others still cover you if the property remains unoccupied for longer.
What About Commercial Buildings?
Commercial property often becomes unoccupied for a variety of reasons, the most typical being that the previous tenant has left and the building is now empty. Unoccupied commercial property insurance policies will typically be limited and security requirements will be strict.
Unoccupied commercial buildings are particularly unattractive to insurers. Insurance for empty commercial buildings is hard to obtain because many insurance companies are not very willing to cover the risks associated with an unoccupied commercial property.
Minimising the Risks Associated with an Empty Property
It is also important to note that an unoccupied property insurance policy will usually exclude flood damage as water can cause a lot of damage in a very short time. Always check the policy carefully to make sure flood damage is included.
An insurance policy is less likely to pay out if you fail to safeguard your property. So you must be sure to take every precaution necessary to minimise the risks. This means that all the doors and windows must be kept locked at all times, all sources of water, electricity and gas are shut off and that the property must be regularly inspected.
Do I have to stay overnight in the property on a regular basis for it to continue to be considered occupied? Or are regular lengthy daytime visits enough?
To be considered as occupied, the property must be used as your sole, permanent residence. If you are not staying at the property for any length of time (with the exception of perhaps a family holiday) or you are living between more than one property, you would need to speak to your existing insurer to see if your cover is affected and may need an unoccupied property insurance policy.