Do I really need vacant property insurance?
There has been a proliferation of unoccupied or vacant properties in Ireland over the past number of years for a multitude of reasons including the following;
- Older properties never re-purposed for varying reasons including;
- Owner in care or Deceased
- Owner sitting on increasing house value – no incentive to invest money into it
- Cost of renovating dilapidated properties being prohibitive
- Many tax breaks previously available to bring disused properties back to the rental market no longer available
- Probate, Inheritance, Ownership & Title Issues & Disputes
- Emigration
- Migration to the cities – less / no demand for rural properties
- Property previously damaged and never repaired
- High Street Properties – shop/retail unit vacant so long that residential units overhead have been neglected
Due to the current Housing Crisis, the Government are asking us to bring these properties back into use and have introduced some tax breaks to do so. They have also introduced a vacant homes tax to dis-incentivise owners of unoccupied or vacant / disused properties from holding them so indefinitely.
What is an Unoccupied Home?
Unoccupied or vacant homes are generally referred to as properties that are unoccupied for more than 28 or 30 days (stipulated by the insurance policy in place at the time the stated occupants left / vacated). Once the 28th / 30th day has elapsed without occupancy, the home / property is deemed unoccupied in so far as insurance policy is concerned.
The test applied by an Insurance Company is whether ‘normal occupancy’ existed before the Damage claim is made. In the event of a claim Insurance Companies will employ a claims expert to assess whether; services (i.e. electricity, water, gas, broadband etc.) were being used consistently, intruder alarm was in regular use, heating was on/set, general home contents and personal clothing & effects were present, food was in the kitchen / fridge and other indicative signs of overnight stays including personal account / rental account activity (e.g. was rent paid / was a deposit refunded / was a bill paid) and also if a tenancy existed at the time of loss.
What’s the issue with un-occupancy?
An unoccupied or vacant property is at higher risk of damage than a occupied home. Increased exposure to vandalism and malicious damage (including fire) is inherent in unoccupied and vacant homes. Where the property shows obvious signs of having been vacated, these exposures are heightened significantly.
Similarly, unoccupied or vacant homes are more susceptible to deterioration as the heating is generally turned off, leading to the likelihood of burst pipes, leaks, mould, damp and condensation effects which can lie undetected for weeks if not months or years.
Storm damage to an unoccupied and vacant home can also remain undetected for some time, leading to ingress of water through the roof or flashing or just further deterioration to the building fabric externally. Broken windows can also lead to ingress of water over time.
Deterioration in a building can result in potential Public Liability claims e.g. (1) trespassers can suffer slips, trips and falls in and around un-maintained / deteriorated properties (e.g. rotten floors / stairs), and (2) a recent Public Liability (Third Party Property Damage) claim occurred where a timber beam in an upper floor had become so rotten that it dislodged and knocked through the wall of the house into a neighbouring sitting room causing significant damage (it was caused by ingress of water over time from the roof).
How do I mitigate against the malicious damage / vandalism exposure?
A number of practical measures can be put in place including;
- Leaving Internal Lights on Timers upstairs & downstairs
- Leaving a car parked in drive (sometimes a friendly neighbour will agree to this)
- Intruder Alarm Set (with bells switching off after 15/30 minutes so as not to cause noise pollution) – monitored alarms preferable
- Regular Inspections / Visits both internally & externally making some changes each time e.g. opening / drawing curtains or changing the timer to another light / lamp in a different room / area
- Clear away post/flyers from behind the front door and seal up the letterbox
- Mow the lawn regularly and keep the driveway clear of weeds / trim the hedges
- Put out the bins when due out
- Don’t leave an obvious padlock on the gate
What type of Insurance do I need for my Unoccupied or Vacant Property?
There are quite a number of Insurers quoting for unoccupied or vacant homes currently. For reasons noted above, cover is both restrictive and more expensive than regular home insurance.
The cover available may be restricted to FLEA (Fire Lightning Explosion & Aircraft) and Public Liability, but it depends on a number of factors such as the nature of the property, the location, sums insured and security and also the intention for the unoccupied or vacant property. Additional perils cover such as Storm, Theft & Flood may also be available at additional expense but with a higher policy excess applying.
The policy will likely come with specific Un-occupancy Conditions such as;
- Electricity & Water being turned off at the mains
- Draining down the pipes & tanks
- Weekly / Fortnightly Inspections
- Gardens being maintained
- Post Box being sealed up and post/flyers removed
- Locks on accessible windows being in place
- Specified door locks on all external doors
Cover may EXCLUDE any damage caused by Builders or Workmen or attributable to Renovation or Building works.
There may also be a high policy excess applying to each claim e.g. €1,000 (or an increased excess applying to additional perils).
Furthermore, the premium may be subject to ‘minimum & deposit’ conditions such that the Insurer may retain a certain minimum portion of the premium even in the event of early cancellation. Typically this could be 50%.
Some Insurers may be agreeable to leave the electricity on to facilitate heating the property and where an intruder alarm is being used, but don’t assume this, you need to have it agreed.
Overview
Firstly, it is vitally important that you notify your current Insurer that the property is now unoccupied. Otherwise your cover is compromised as there is a duty contained in each policy to notify when the property becomes unoccupied. This Insurer may agree to continue cover until natural renewal date, albeit restricted cover with Un-occupancy Conditions and a higher excess applying. In some circumstances the current Insurer may wish to come off cover immediately and necessitate you seeking cover elsewhere.
There are numerous specialist unoccupied or vacant property insurers, all with similar cover offerings but competing on price. Some will allow short term cover (e.g. where the property is for sale / sale agreed) without penalty, and some will protect their premium intake through a ‘minimum & deposit’ condition.
Each Insurer will have their own unoccupied and vacant property appetite (e.g. some will not cover homes undergoing renovation / extension works) and acceptance criteria.
It is important to discuss and explain the specific circumstances of the unoccupied house, including physical security, the current owners name(s), the intention for the property and in some cases pictures of the front & rear will be required.
Be sure to carefully read through the formal quotation, terms, conditions and documentation provided by the Broker / Insurer before proceeding with cover as many conditions are noted within the policy wording and not necessarily in the headline quotation document or email.
S.A. Faughnan (Brokers) Ltd. specialise in longer term unoccupied or vacant property insurance Click Here . If you have any queries or questions in this regard, please do contact us on 01 824 5555 or by emailing us a newbusiness@safaughnan.ie
Click to Get Quote Now
Or
CALL US NOW (9am-5pm Mon-Fri)
