Properties run a high risk of damage and disrepair, whether they’re lived in or not. Some of the most costly damage comes from flooding and storms, which can happen at any time but the risk profile of almost all types of insurance claim goes up substantially if properties are not occupied. If you’ve got rental properties without any current tenants, it’s still important to get cover. Vacant properties are a common issue for landlords. You might have an empty buy-to-let property for several reasons, including:
- You’ve only just purchased the property and don’t yet have any tenants
- Being in between tenant contracts
- You’re refurbishing, redecorating or doing work on the property
- You let to students, and the property is empty over the holidays.
Unoccupied Properties = Greater Risk
Insurers generally see unoccupied properties as having a higher risk of theft and damage than those being lived in. As such, many providers oblige you to take out additional, separate insurance for empty properties. Most unoccupied cover applies to properties empty for 30 days to a few months, although some longer-term vacant property insurance can cover you for up to a year.
Sometimes, standard insurance policies will cover you for an unoccupied property, but not always. If they do insure unoccupied property as standard, it usually comes with certain conditions which must be met:
- You may have to turn off services such as electricity or gas
- You may have to keep the property at a specific temperature during the colder months to prevent pipes from freezing and bursting
- They may make you regularly visit and inspect the property, usually every seven days
- You may have to secure the property against theft by using approved locks on doors and windows and installing a burglar alarm. If you use certain locks, such as five lever mortice locks, you could knock even more money off your premium.
Not all standard landlord policies cover you while you don’t have tenants living there, particularly if the property has been left empty for an extended period of time. Even if it’s not included as standard, most providers do offer vacant property landlord insurance, but you may have to ask for it and pay more to add it on. Be sure to check your policy, so you know exactly what’s covered.
Risk in Context
Let’s look at a case study – A local landlord has a buy-to-let property. Six months into their first rental contract, one of the pipes bursts in the kitchen. The water spreads through the cabinets, flooding the kitchen and hallway. All the kitchen units, flooring and part of the ceiling are damaged beyond repair and need replacing. The water runs out into the adjacent living room, destroying the living room carpet, which also needs replacing.
Refurbishing the kitchen would take six months to complete. Fortunately, the landlord has landlord insurance, complete with contents insurance and rehousing for tenants. The landlord is able to claim back repair costs of £2,200 and claim £6,300 to rehouse the tenant while the work takes place.
Without landlord insurance, this affair could have cost the landlord almost £10,000 just six months into their investment. Such a blow could have landed the owner in significant debt and caused them to default on their mortgage payments. With their extensive landlord insurance policy, however, the landlord only paid the premium and one week’s rent, losing less than £1,000. Not only has insurance covered the landlord financially, but their cover meant they were able to deal with the issues quickly and effectively, protecting their relationship with their tenant.
