Your home insurance might not pay out if a flood, theft or other damage happens when one of your residences is unoccupied says Olivia Clowes, Account Director for Aon’s Private Clients division.
Many high net worth clients have multiple residences that they might use regularly or rarely visit. In a year dominated by the coronavirus pandemic, the disruption has probably meant that some of those residences have been left unoccupied for longer than usual, particularly with lockdown restraints on travel.
From an insurance perspective, unoccupied homes can lead to problems where owners fail to meet the terms and conditions on their home cover. These could stipulate, for example, that a property cannot remain vacant for longer than sixty days. If they are left empty, any subsequent claim could be challenged, reduced or even invalidated leading to significant losses for the home owner.
Anyone at home?
Insurers will want to know that the owners of the homes they insure are taking reasonable care of their properties to help reduce the possibilities of a claim. Making sure each property is regularly occupied or at least checked frequently is a key part of that duty of care to prevent claims from incidents like burst pipes, which can result in a costly claim for damages related to the house, its furnishings and contents.
It’s why some insurers will impose additional requirements such as the installation of a water leak detector, or request that the property is frequently visited by someone – such as a house manager – to make sure there are no problems. Another requirement from insurers for unoccupied homes is often to make sure the central heating is always on to at least 10°C to prevent pipes freezing and bursting, as well as turning off the water supply.
Taking precautions like these can be invaluable. I recently worked with a client who initially rejected installing a water leak detector in their second home but, after much persuasion, agreed to fit the equipment. A few weeks later that property experienced a large flood and while it still led to a claim, the damages were far less than they could have been because the water leak detector had alerted the owners to a problem.
Smash and grab
Water damage isn’t the only risk to unoccupied homes. Theft is an ongoing issue and insurers will want to know what valuables are being left in the property. Having the right security in place in terms of alarms and systems that are switched on, regularly serviced and checked is important. Insurers might also choose to impose a theft exclusion on the policy which reinforces the need to know exactly what your policy will or won’t cover.
It is one reason why we look to review cover for a client’s multiple homes at each renewal to make sure the cover is keeping up with your lifestyle, in terms of how you use the properties and what you keep at each one.
That process can involve assessing how often you’re in each property and what arrangements you make for when you’re not there, as well as making sure that the limits of the policy are adequate for any possible losses. Underinsurance can be a big problem that only reveals itself when a claim is made.
Keep your insurer comfortable
If your home is unoccupied for periods of time, our aim is to make sure your insurer feels comfortable that all appropriate precautions are taken so that there are no unexpected issues with a claim.
If you are away from one of your homes for long periods, speak to your insurance broker to check that you’re properly insured in the event of a problem. That conversation could save you from a costly incident in the future.
Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article.
This article has been compiled using information available to us up to 15/01/21.