by: Morag Keohane Dip CII, Insurance Manager at Caxtons
Empty properties have become an unavoidable consequence of today's economic climate, leaving many landlords out-of-pocket as rental income dries up. While a vacant period can be a serious financial blow, landlords need to be aware that insurers view unoccupied buildings as high risk too.
To comply with their insurer's policy terms, landlords must make sure they are doing everything they can to protect and manage any vacant premises. This means assessing the risk for each building and implementing a range of appropriate and relevant security and protection measures.
As soon as a property becomes vacant, landlords should notify their insurers to prevent any future claims becoming invalid. How much action landlords then need to take will depend on the location and type of premises.
As a general rule of thumb, any properties with a declared value of less than £1 million will need to implement standard non-occupancy precautions. While premises with a declared value of more than £10 million will need to put in place additional security measures.
For those buildings with a declared value in the middle of this range, the preventative action required will be influenced
by a range of factors, such as whether the property is an office situated in a city centre or if it's a factory unit located on an industrial park - the latter meaning more precautions need to be taken.
Standard unoccupied property precautions involve isolating all services, draining the water system, permanently sealing all letter boxes, removing waste from inside and outside the building, securing the building using all devices, retaining intruder alarm systems and conducting very regular inspections of the premises.
Where insurers expect additional precautions because of where the building is located, or the type of premises, landlords may be expected to implement a series of measures, which could include installing an approved intruder alarm and monitored CCTV to erecting concrete blocks to slow down intrusion on to the site and arranging a security guarding service.
Using a managing agent can relieve the compliance and marketing burden of a vacant property from the landlord. This is particularly helpful as it becomes the agent's responsibility to make sure the appropriate procedures are followed when a property becomes vacant.
For detailed advice about the measures needed to protect unoccupied buildings for insurance purposes, contact Morag Keohane