Is your unoccupied property adequately insured? Here’s what you need to know

27 Sep 2018

Bertus Visser, Chief Executive of Distribution, PSG Insure

Your holiday home might be in a sleepy seaside town where crime is the last thing on your mind. But your insurer is likely to see it differently. Because holiday properties are generally left unoccupied for long stretches of time, the risks associated with the property go up. The same applies to empty-standing commercial properties.

Insuring your holiday home may therefore involve a different approach from your insurer when compared to the home you live in year-round. Similarly, a commercial property that is left unoccupied will have associated insurance implications. Both could mean higher premiums.

We’ve set out important considerations to be aware of when it comes to insurance and your unoccupied property below. If there is anything that remains uncertain, it’s an important topic to discuss with your short-term insurance adviser. 

Holiday homes

Certain types of cover may be restricted

Typically, if your property is unoccupied for more than 60 days a year, your cover against loss or damage caused by theft or burglary will lapse. This is unless your insurer has agreed to extended cover in writing, and you have paid any additional premiums required.

A vacancy rate of more than 60 days a year may also mean that your cover for loss or damage caused by water, flooding and fire is limited. Therefore, it is important to get clarity on the associated terms and conditions in your policy. For example, for any claim for damages caused by burst pipes or geysers to be considered, you will likely be required to switch off your water mains when the property is unoccupied.

You may have special security requirements

Security requirements for holiday homes may be more stringent than they are for your main residence. This is because holiday properties typically remain unoccupied for extended periods. Your insurance premiums may also be higher to compensate for the associated risks.

The exact details of security requirements for your holiday home will be specified by your insurer and noted in your policy agreement, but they typically include:

  • burglar bars being fitted on all opening windows
  • security gates being fitted on all external doors
  • additional locking bolts or security gates for sliding doors
  • a radio-linked alarm system with armed response – make sure this is in working order

Provisions apply to rental properties

If you rent out your house to others, note that your insurance policy is unlikely to cover any malicious damages or theft caused by the tenants. If your property is let out on a short-term basis, it is important to make sure that someone is responsible for switching the water mains on and off as required by your insurer.

Unoccupied commercial properties

If any building you own becomes unoccupied for 30 consecutive days or more, your insurer is likely to suspend all cover. This is unless you have a written agreement from your insurer to extend the cover you have in place before any claim event occurs. You will also need to meet any additional requirements your insurer sets and will likely need to pay higher premiums and excesses. In most cases, you would be responsible for paying 20% of any insurance claim related to a commercial property that has been unoccupied for 30 days or more.

Going on a long holiday?

If you are leaving your home unoccupied for more than 60 days, it is important to notify your insurer in advance to find out if there are any special requirements you’ll need to comply with. Your insurer may need to adjust your premiums for the time you are away, as an unoccupied property is deemed a higher risk. Depending on the costs involved, it might make financial sense to employ a house sitter.

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