Unoccupied Buildings: Insurance During the Lockdown.

April 2020

It is normally the case that insurance companies apply stricter terms to unoccupied commercial property. Policy wording typically reduce cover to only the main Fire perils and require policyholders to notify them whenever a business premises becomes unoccupied.

We now find ourselves in a situation where most business premises are closed and the major insurers are responding to that in different ways.

We have detailed below the response we have received from some of our insurer partners to our questions on this issue. Please get in touch to discuss your own particular situation.

NOTE: Any premises that were already unoccupied prior to the lockdown will still be subject to normal policy terms.

RSA would consider business premises closed due to coronavirus to be temporarily unoccupied (as defined in the policy). However, certain standard restrictions in RSA policies for unoccupied properties will not be applied, provided that the period of closure does not exceed 90 days. What this means for such premises is that, for the period that they may be closed for the above reasons or for up to 90 days maximum (whichever is the shorter period):
1) Where the policy wording excludes Malicious Damage, Escape of Water or Theft with respect to buildings that are empty or not in use, such exclusions will not apply
2) Security and Inspection conditions applicable to Unoccupied Properties will not apply

The recent Government announcement means more businesses will close and many will be working from home. Therefore, many more properties will be unoccupied for the next few weeks, and potentially beyond.
Within NIG’s standard policies, cover will continue to be in force for any Commercial premises temporarily unoccupied for a period of up to 30 consecutive days, and 90 days for premises insured under our Property Owners contract. From 24th March 2020, we are extending this period to 60 consecutive days for Commercial premises or 90 days for Property Owners temporarily closing during to COVID-19, before we ask to be notified. For any clients whose premises is going to be out of use for longer than this, you need to notify us.
Any building left unoccupied naturally poses a greater insurance risk and we therefore need businesses to take the following additional measures for the above extension to apply:
• That the Premises is secured, by putting all protective, locking devices and any alarm protection, in effective operation.
• Where practical, turn off the gas, water and electricity supplies at the mains (except electricity needed to maintain any fire or intruder alarm systems, or water and heating systems for sprinklered Premises).
• Where possible, the Insured or their representative should visit once every 7 days to physically check the premises and carry out immediately any work necessary to maintain the security of the premises in all respects.
• Remove all trade refuse and waste materials from the interior of the Premises, allowing no accumulation of refuse or waste in the adjoining yards or spaces owned by the Insured.
All other Conditions requiring Policyholders to take action or respond to intruder alarm activations, faults or other maintenance-related matters will continue to apply unless otherwise agreed to be impractical due to COVID19 Government-directed actions limiting or restricting the movement of people.

Given the current situation, we appreciate that your customers may have had to temporarily leave their premises unoccupied due to the Covid-19 outbreak.
We usually ask that you notify us if the premises are going to be unoccupied for more than 30 consecutive days for Allianz Commercial standard policy wordings, or 45 days for SME wordings. We’re now extending this period to 60 days, so you only need to let us know at the end of the 60 day period if the premises will still be unoccupied. During that 60 day period your customer’s existing cover will remain in place.
If your customer’s premises were already unoccupied before the Covid-19 outbreak, and your customer is unable to meet the terms of our unoccupied conditions due to the current restrictions, please get in touch.
We’ll continue to review this position as the situation develops.

Get in touch.