The implication of this situation quickly became apparent to insurers. Unoccupancy is generally undesirable to insurers as it can significantly increase the risk of theft, malicious damage and loss from disrupted mains services.
Under normal circumstances there is usually an expectation that owners of unoccupied properties would take reasonable precautions to reduce the risk of loss, or it may be a requirement under your insurance conditions.
Some of the action required may include:
- Board up windows
- Tape letter boxes
- Drain water tanks
- Turn off mains supplies
- Regular physical inspections
In lockdown actions like the above may not have been possible nor practical and as a result many policyholders ran the risk of failing to meet the unoccupancy condition within their insurance policies and may have become uninsured with little or no ability to remedy the situation.
Thankfully many insurers helpfully provided certain waivers of specific policy conditions ensuring coverage remained in place during these very unusual times.
What now?
As the UK starts to emerge from lockdown, many clients are starting to re-open their premises. Insurers are inevitably, therefore, starting to consider whether their waiver should remain in place. We have seen some come to the conclusion that they should not. Gallagher is aware of the potential implications and is speaking regularly with underwriters to help ensure we can continue to provide client with current information.
We must not forget however, that many organisations have multiple locations. Often the management of these locations sits with a colleague in your business who may not be aware of the insurance implications of an unoccupied building. If not reviewed, colleagues may inadvertently not realise that not disclosing continuing unoccupancy may expose your organisation to potentially uninsured risk.
We would recommend to all clients that they take stock of their current position and where premises, which were closed to ensure compliance with lockdown and remain closed, they contact Gallagher for assistance. Whilst many insurers will be willing to consider an extension to the waiver, they may need assurance regarding the ongoing management of the property in question before confirming cover.
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. It reflects our understanding as at 14/07/2020, but you will recognise that matters concerning COVID-19 are fast changing across the world. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. Our advice to our clients is as an insurance broker and is provided subject to specific terms and conditions, the terms of which take precedence over any representations in this document. No third party to whom this is passed can rely on it. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law. Should you require advice about your specific insurance arrangements or specific claim circumstances, please get in touch with your usual contact at Gallagher.
