Anybody home?Hello, anybody home?

Having a property sitting vacant can not only mean no income, it could mean no insurance cover too.

The festive season and summer vacation time is often when there is a change in tenants – with the end of school year there is the exodus ‘home’ for international students, while for families, the looming new school year often means moving to preferred school catchment areas. It is also a time when many landlords will take the opportunity to renovate their rentals.

But whether the rental property is sitting vacant by design (e.g. those that tap into the student market, during renovations or those leaving the premises empty for other reasons) or by circumstance (e.g. taking longer than expected to get new tenants, a lone tenant requiring long-term medical treatment away from the property or as extensive repairs are needed) – if the property is unoccupied for a while, the insurance may no longer be valid.

There is an exclusion in most landlord insurance policies (and home/building covers too) which relates to the premises being vacant or unoccupied. While the specific number of days may vary – it often ranges between 30 and 90 days – most policies cease to apply once the property has been empty for the specified period. For RentCover policies, the time limit is 90 consecutive days and policyholders must tell us and obtain our written agreement for full cover to continue. It should be noted that the applicable excesses also increase when the premises are unoccupied for more than 90 days.

Once the property remains untenanted for an extended period, it will be considered unoccupied. If the property is vacant for longer than the policy allows, one of two things could happen:

The insurer may impose an additional excess on any claims that arise while the property is unoccupied.

The policy may be cancelled.

Insurance is all about risk. When a property is unoccupied it’s a prime target for burglars, thieves and vandals – there is an increased risk it could be used as a ‘squat’ or clandestine drug lab, or suffer malicious damage. Events that may only cause minimal damage if the property is occupied, i.e. someone is there to look after it, can cause much more serious damage if there’s no-one at home. As an example, if a water pipe were to burst, the tenant can turn off the mains water supply and call the agent/landlord to arrange an emergency plumber. If the premises are unoccupied, extensive damage could be caused before anyone is on-site to notice the problem.

It is also often the case that, when there is no occupant, the landlord and agent can’t get on-site quick enough to protect it against fire, storm or other weather-related perils.

To minimise their exposure to this increased level of risk, insurers impose terms and conditions on leaving a property unoccupied. A vacant property can require either an endorsement or a separate policy, depending on the insurance company and some insurance companies will not insure vacant homes at all. For insurers that will take on the risk, coverage limits and premium costs for unoccupied and vacant homes vary, based on how long the home will be empty and the steps the owner takes to protect the property, such as installing smoke detectors and alarm systems. In most instances, if the insurer agrees to extend cover, the policy will only cover standard perils such as fire and wind, but not perils such as water damage due to burst pipes, glass breakage or vandalism. They may also impose additional exclusions and restrictions on the policy, for example, it may be a requirement to ensure the premises is kept in a ‘lived-in’ state.

The bottom line: Insurers need to be aware that the property is vacant so they can determine if they will extend cover, under what terms and conditions, at what premium and for how long.

RentCover policyholders whose property will be vacant for more than 90 days should contact our customer service team to discuss their options. Remember, it’s a requirement to notify the property’s insurer if there is a material change at the premises – and this includes that it is unoccupied for an extended period. Failure to do so can void the policy and leave the owner at risk of having no form of compensation for property damage caused by fire, water or other perils.