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Vacant House Insurance
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Vacant House Insurance
In some British cities, as many as one in four of all house fires take place in vacant or empty property. This is the reported experience of the London Fire Brigade and makes frightening reading for the many thousands of homeowners each year who, for one reason or another, need to leave their houses vacant for some time. Though many thousands of such homeowners might be at risk, relatively few appear so far to have caught on to a new financial safeguard on the market in the shape of vacant house insurance.
Sadly, vacant or empty houses are a magnet for unwelcome attention. When a property stands unoccupied, it is far more vulnerable to the threat of malicious damage and vandalism. Most damaging of such mindless acts, of course, is the risk of arson. An empty or vacant property is at much greater risk of damage by fire than an occupied home.
Similarly, the vacant house is also more vulnerable to the risk of accidental fire. With no one at home to spot the early telltale signs, when fire takes hold it can be many valuable minutes before the alarm is raised, the fire dealt with and the damage minimised.
Indeed, most of the risks to our homes can be multiplied several times over when the house is vacant for any period of time. A burst water pipe, or even a slow-dripping tap, can cause considerable damage if there is no one to spot it early enough. Rising flood waters might be diverted by neighbours on the spot to protect their own homes, while the vacant property is the one that gets left until last. Last night's storm might have loosened tree roots or branches that come crashing down on the unoccupied home when the winds pick up once again.
Insurers, of course, make it their business to know all about such risks. They are aware of the heightened vulnerability of a vacant home. And that is probably why the majority of mainstream insurers grow distinctly nervous and coy about the cover they are prepared to extend to the temporarily vacant house. In many cases, the level of cover is substantially reduced when the house is unoccupied; in other cases, the cover is even treated as lapsed or void.
Clearly, however, the property is still a considerable asset that needs the continued protection of adequate insurance even when it is vacant - indeed, there is probably a still greater need when it is unoccupied. A specialist insurance product has been developed by a few discerning insurers, therefore, specifically to tackle this need - vacant house insurance.
Vacant house insurance recognises the specific and particular risks posed by a vacant property and, instead of turning its back on them, works with the owners of such properties in order to manage the heightened risk, take steps to reduce the risks and offer indemnity against any loss or damage if things should go wrong. Like many innovative products, however, vacant house insurance is not widely known and it can sometimes prove more difficult for the homeowner to find exactly the right cover for his particular needs. Those looking to find the most appropriate type of vacant house insurance, therefore, could be well advised to seek the services of a specialist, professional insurance adviser.
Vacant property insurance can be the landlord’s lifeline
If anyone was in any doubt beforehand, the recent credit crunch has shown that buy to let investments are not for the faint-hearted. Mortgage costs have raced ahead, leaving rental incomes trailing behind, while falling property prices have left landlords with little in the way of an exit strategy. The very last thing any buy to let investor can afford, therefore, is any loss or damage to the property at the heart of the business. There has never been a more pressing need for vacant property insurance, therefore, which could easily prove the landlord’s lifeline if things went wrong.
So, what is vacant insurance? Simply, it is the insurance cover the landlord needs to protect his property, his contents and his responsibilities as landlord when the building is empty – either because the landlord is awaiting new tenants or because the building is undergoing renovation or conversion, for example.
And why is it needed? Vacant insurance is likely to be needed because the landlord’s normal buy to let property insurance is probably fine when the building is let to and occupied by tenants, but just as likely to be quite inadequate when the building is vacant or empty. Insurers know that buildings and their contents are more vulnerable to a wider range of risks when left vacant than when used occupied as someone’s home. For that very reason, therefore, many leading insurers distinguish carefully between the level of cover extended when the property is occupied and when it is vacant. In the latter event, they reduce the level of cover or sometimes treat the cover as lapsed.
To make good this critical – and potentially dangerous and expensive – gap, therefore, vacant insurance has been developed and marketed by a handful of insurers to meet the obvious need for continued insurance when property is vacant.
Vacant insurance is of particular interest to buy to let landlords, of course, since there will inevitably be periods when the property is unlet. Yet the fabric of the building, the contents owned by the landlord and the landlord’s liability towards potential tenants he might be showing around clearly still need to be covered. In the case of the landlord, too, the arrangement of such cover might need to be made at very short notice, since there is no way of knowing when present tenants might leave. By the same token, however, the landlord might also wish to cancel such vacant insurance once new tenants have been found and the property re-occupied once again. Ideally, he would like cover that can be cancelled at equally short notice without attracting a penalty for early termination.
Many vacant insurance policies offer all of these features, offering the buy to let landlord and especially attractive lifeline at a time when many other aspects of his business are under increasingly tight financial pressure. Vacant insurance will give the landlord the security and peace of mind that his buy to let investment continues to receive the level of insurance he needs, even though the property itself has to remain vacant for a while.
Vacant insurance is a relatively new financial product, probably not widely known (even among many insurers). To find the most appropriate type and level of insurance to suit your own property needs, therefore, it could be sensible to consult our experienced, specialist insurance advisers.
* 75% of all customers receiving an online quote in May 2017 could have obtained a cheaper quote over the phone, based on the information they provided