Unoccupied commercial property insurance is much more difficult to obtain than standard commercial property insurance. It is likely that cover will be limited and security requirements will be stricter. The security requirements for unoccupied property are often more onerous than for commercial buildings and contents insurance.
When quoting for this type of cover, the insurers will require answers to all the standard underwriting questions, such as construction, age, location and previous claims. Normally, shops and offices have the lowest rating with factories and premises where goods are manufactured being the highest. It is nevertheless possible to obtain cover for unoccupied commercial buildings.
Residential unoccupied property insurance has become a specialised area with an increasing number of insurers willing to insure these properties. However, despite this, insurance for empty commercial buildings has become hard to obtain. Many insurance companies are simply not prepared to meet the additional risks (such as squatting and often longer unoccupancy periods) associated with unoccupied commercial property.
Unoccupied commercial buildings are particularly unattractive to underwriters in view of the increased chances of theft and malicious damage. Plus, without heating in place, the threat of burst pipes also increases. Unoccupied home insurance is easier to place but will generally come with additional terms and conditions. These may include draining the heating system, turning off the mains water, or ensuring the heating is kept on to prevent freezing.
When selecting an insurer for unoccupied property, it is important to provide a fair presentation of the risk (property) you wish to insure in the application form. Tell them exactly why the property is vacant and provide them with a schedule of any work to be done. If you don’t answer these questions honestly, your policy may be cancelled or withdrawn. A claim may also be rejected or not fully paid.
Before obtaining a quote, we recommend that you consult a surveyor to obtain an up-to-date reinstatement value. Underinsured properties will result in any claim value being reduced. If you require unoccupied house insurance, you can obtain an up-to-date reinstatement value by visiting the Building Cost Information Service (BCIS).
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