Is your Vacant Property insured

As insurers take different approaches to their treatment of vacant property during COVID-19, property owners are being encouraged to check their policy conditions.

Commercial landlords may be exposed to significant losses due to vandalism, arson, squatting and theft at their sites, if changes in policy conditions go unnoticed, says security and property asset management service Secure Empty Property.

A significant number of commercial, industrial and warehouse facilities are currently vacant, with all but essential sectors working from home. The UK lockdown began on 23 March 2020, and is expected to continue for the foreseeable future, with those units left unoccupied.

So, what might this mean for your building’s insurance policy and what do the different insurers say about it?

“During the COVID-19 emergency, a specialist vacant property security contractor can make the difference between a property being safe and insured or landlords being exposed to significant potential losses”.

–Simon Broadbent

CEO, Secure Empty Property

Unoccupancy conditions

All insurance policies contain unoccupancy conditions which need to be complied with if the property becomes vacant. However each insurer has a slightly different definition of unoccupancy and the steps the property owner must take.

3 Dimension Insurance, a specialist commercial property broker, has highlighted this differing approach by reviewing every insurance companies unoccupied property policies for their clients.

For example, the RSA Insurance Group normally don’t require the unoccupancy conditions to be complied with until the property has been vacant for 30 days. If however, any premises has had to be shut due to a government announcement, the RSA will not enforce the provisions in the policy relating to unoccupied buildings.

This approach contrasts with Axa which considers a property to be unoccupied once it has been empty for 30 days. This hasn’t changed despite the Coronavirus pandemic, and they will require notification after this period and the unoccupancy conditions will need to be complied with.

Complying with policy conditions under lockdown

Complying with policy conditions under a lockdown be a challenge. For example, where weekly inspections are required, these may not be possible for employees to undertake. Travel restrictions may be extended, or staff put in isolation. In this instance, using a specialist security contractor for empty property security would be necessary as their operatives are classed as key workers and will not be subject to travel restrictions for inspections or alarm call-outs.

Security measures

Deciding what security measures to mitigate risk at each site is also a consideration for landlords. According to Secure Empty Property, many companies are using plywood boarding to secure vulnerable glazing and window openings without considering specialist security options.

Although policy conditions can require ‘boarding up’, professional anti-vandal security measures are available which allow both natural light penetration and ventilation to secured buildings.

Physical perimeter security may not always be required at all as sophisticated, temporary intruder and smoke alarms can be installed. Allowing mains power to be isolated, these wireless and battery-powered alarms are monitored 24-hours with a fast response to activations and re-securing the property if required.

Some may be subject to tight timescales

QBE Insurance has waived unoccupancy conditions during government restrictions but once these have been lifted, the empty property will be considered to be unoccupied after a further 7 days. So any new conditions must be implemented in this short timescale.

Keith Langton, Director at 3D Insurance says, “The principle of ‘Treating the Customer Fairly’ has been highlighted by the insurers and they will look kindly upon any cases where the virus has resulted in a period of unoccupancy”.

Simon Broadbent, CEO of Secure Empty Property said, “During the COVID-19 emergency, a specialist vacant property security contractor can make the difference between a property being safe and insured or landlords being exposed to significant potential losses”.