Why landlords property insurance might not pay out during void periods or when a property is undergoing refurbishment

Most landlords look at reducing council tax and business rates while letting property is unoccupied but don’t realise they may have voided their buildings insurance if they make a claim while the property is empty.

Thousands of homes stand empty at any one time – the latest figures for England show 650,000 homes were vacant throughout 2009.

The small print of many buy to let buildings insurance policies states that if a property is vacant for 30 consecutive days or more, the cover is significantly reduced or lapses.

That means if a claim is made against the policy, the insurer may not pay out because the owner failed to keep to the terms and conditions of the cover.

Keeping up insurance premium payments for that time makes no difference to the provider’s decision, so a property owner could be paying out for non-existent cover.

Some polices let properties stand empty for longer – perhaps up to 60 consecutive days before they are voided or cover is reduced.

One of the most common reasons a property is unoccupied is for refurbishment.

To keep cover going, insurers will want to know what building work is going on and who is doing the work.

Some companies will restrict their cover unless a competent builder is carrying out the construction. This basic cover is known as “FLEE’ in the insurance trade and means the only insured risks are fire, lightning, earthquake and escape of water.

Property investors should tell their insurers about any major building work at a home, as leaving insecure doors, windows or other access while refurbishment is under way could lead to a rejected claim.

Likewise, with void periods that are likely to last longer than a month.

Landlords also need to check their policies to make sure cover is in force if the property has any rental void or when a holiday let is empty out of season.

Voids can lead to insurers reducing or ceasing cover and many policies will state that owners should inform the insurance firm if the property is due to stand empty for any prolonged period.

A good way to prove occupancy is to keep a ‘logbook’ that shows exactly when a property is occupied together with details of council tax or business rate payments, if these are made on behalf of tenants.

The Money Centre will be pleased introduce you to the administrators of our Insurance Scheme. They will be delighted to provide a free, no obligation review of your insurance policy and to discuss the terms with you as well as providing an alternative quotation.

For further details please fax or email us a copy of your policy schedule.

Fax 01603 428545 or email InsuranceRenewals@themoneycentre.com alternatively, please call Paul Baudinet on 01603 428588.

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