While insurance on property is not required, it is a must-have for protecting your asset. If the property is mortgaged, your lender often requires it as a condition of lending. But there are certain times when full coverage on your property is unnecessary, for example, when the property is vacant. Vacant property often occurs when the property is awaiting probate or sale, when it is being refurbished or renovated, when the owner is abroad or at a second property, or when the owner is hospitalised.
If your property is vacant for whatever purpose, you can take advantage of lower cost unoccupied property insurance. You can cover both building and contents under such a policy. Terms are usually 3, 6, 9 or 12 months and there may be low limits available on contents.
When purchasing unoccupied insurance, remember that the property must be in and remain in a good state of repair. Properties should not be boarded up or appear untidy. This includes the lawn. If the property is in probate, it is the executor’s responsibility to purchase cover until the asset is disbursed or disposed.
Unoccupied cover is usually only taken out between lettings when major repairs or renovations are necessary to make the property liveable. If you anticipate less than three months of vacancy, you’ll want to maintain your regular cover.
Two forms of lesser-known insurance is also available to landlords: rental loss and landlord’s indemnity. The first – rental loss – is usually covered under building insurance. In the event of a covered building claim (fire, burst pipes, etc.), loss of rent is covered under the policy. However, you want to double check to ensure this is a part of the policy instead of assuming. Under landlord’s indemnity insurance, lost rents from absconding tenants are recoverable. This is especially important in the case where the property has also been damaged and needs repair to become habitable. This insurance can be critical to cover the mortgage payment and maintain good credit.