What Does Unoccupancy Mean in Insurance Terms?
When it comes to insurance policies, it's vital for one to understand all the terms and conditions involved, including what the insurer considers to be an "unoccupied" property. In this post, you’ll learn what unoccupancy means, and the roles of two important organisations: the Financial Ombudsman Service (FOS) and the Financial Conduct Authority (FCA) in the UK insurance industry.
Let’s jump right into it.
So What Is The Definition of an Unoccupied Property?
Unoccupancy refers to a situation in which a property is not lived in or occupied by its owner or tenant. In the UK, unoccupancy can have implications for insurance policies and coverage, as it may affect the type of policy needed, the amount of coverage, and the premiums charged.
For home insurance, unoccupancy can mean that the property is not occupied for a certain period of time, typically 30 days or more. During this time, the property may be considered at a higher risk of certain damages, and the insurance company may require the policyholder to take additional steps to secure the property. For example, the policyholder may need to ensure that the property is properly secured, and that all utilities are turned off and the water in drained down.
Losses that are Covered when a Property is Unoccupied
In the UK, when a property is unoccupied, the cover is mostly limited to FLEA cover, which are described below.
- Fire damage: Coverage for damage caused by fire, smoke, and other related causes.
- Lightning damage: Coverage for damage caused by lightning,
- Explosion: Coverage for damage caused by explosion.
- Earthquake: Coverage for damage caused by earthquake.
Losses that are generally not covered when a property is unoccupied
Below are some of the losses that aren’t covered by unoccupied home insurance:
- Escape of water and oil
- Subsidence
- Theft
- Strom or Flood
- Vandalism
- Impact
You might also be wondering…
If a property is unoccupied, what are the steps that property owners should take to ensure that the property is protected and that their insurance coverage remains valid?
Below are some of the most important steps one ought to take:
- Review your insurance policy: Before leaving the property unoccupied, it is important to review your insurance policy and understand any restrictions or requirements that may apply. For example, some policies may require the property to be regularly checked or to have a working alarm system.
- Secure the property: Make sure all windows and doors are securely locked, and consider installing additional security measures, such as deadbolts, window locks, or a burglar alarm.
- Turn off utilities: If possible, turn off the water supply and disconnect the electrical supply to reduce the risk of damage caused by leaks or power outages.
- Leave the heating on at a low setting during the winter. This can help to prevent damage from freezing pipes and other issues.
- Clean the property: Clean the property before leaving, as this can reduce the risk of damage from vermin or other pests.
- Check the property regularly: It is important to check the property regularly, especially if it will be unoccupied for an extended period of time. This can help to ensure that the property remains secure and to identify and address any problems that may arise.
- Notify the insurance company: If your insurance policy requires you to notify the insurance company when the property is unoccupied, be sure to do so. This can help to ensure that you have the proper coverage and to prevent any disputes in the event of a claim.
- Obtain additional coverage: If your property will be unoccupied for an extended period of time, consider obtaining additional coverage, such as unoccupied property insurance. This type of insurance can provide extra protection and peace of mind while your property is unoccupied.
By following the above steps, property owners can help protect their property and ensure that their insurance coverage remains valid while the property is unoccupied. If you have any questions or concerns about your insurance coverage, be sure to speak with your insurance company or a professional insurance broker.
How Much Does Unoccupied Home Insurance Cost in UK
The cost of unoccupied home insurance in the UK can vary depending on several factors, such as the location of the property, the size of the property, and the level of coverage required. On average, the cost of unoccupied home insurance in the UK ranges from £100 to £500 per year. However, some insurance companies may charge more or less depending on the specific circumstances of the property and the coverage required.
It's important to shop around and compare quotes from different insurance companies to find the best coverage and price for your unoccupied property. You may also be able to negotiate a better rate by bundling insurance policies or by taking steps to improve the security of your property, such as installing a security system or adding locks.
Roles of FOS & FCA in Unoccupied Home Insurance in UK
In the United Kingdom, the insurance industry is heavily regulated to ensure that policyholders receive fair treatment from insurance providers. To achieve this goal, two organisations play a crucial role: the Financial Ombudsman Service (FOS) and the Financial Conduct Authority (FCA). These organisations are responsible for resolving disputes between policyholders and insurance providers, as well as enforcing regulations on insurance providers to ensure that they operate fairly and transparently.
Roles of Financial Ombudsman Service (FOS):
The Financial Ombudsman Service (FOS) is an independent organisation that provides free dispute resolution services to consumers who have complaints about financial products or services, including insurance. The FOS handles complaints about a wide range of financial products and services, including mortgage loans, bank accounts, credit cards, pensions, and insurance policies. The FOS is not a government body, but it is authorised by the UK government to provide dispute resolution services.
The role of the FOS is to resolve disputes between policyholders and insurance providers. When a policyholder is dissatisfied with the way their insurance claim has been handled, they can make a complaint to the FOS. The FOS will then investigate the complaint and make a determination on whether the policyholder's rights have been violated. If the FOS determines that the insurance provider has acted unfairly, it may order the provider to pay compensation to the policyholder.
The FOS is an effective tool for policyholders to resolve disputes with insurance providers. The FOS provides a free and impartial service, and its decisions are binding on both parties. This means that if the FOS orders an insurance provider to pay compensation, the provider must do so, even if it disagrees with the FOS's decision. The FOS also provides policyholders with a quick and efficient way to resolve disputes, as the FOS's processes are designed to be quick and easy to use.
Roles of Financial Conduct Authority (FCA)
The Financial Conduct Authority (FCA) is a UK government-sponsored body that regulates financial markets and services, including insurance. The FCA's role is to ensure that consumers receive fair treatment from financial institutions and that financial markets operate transparently and fairly. The FCA is responsible for enforcing regulations on insurance providers, and it has the power to fine providers or revoke their licenses if they violate regulations.
The FCA's role in unoccupied home insurance is to enforce regulations that ensure that policyholders receive fair treatment from insurance providers. The FCA sets standards for the way insurance providers operate, and it requires providers to be transparent about their products and services. The FCA also requires insurance providers to treat policyholders fairly and to handle claims in a timely and efficient manner.
The FCA is an effective tool for ensuring that insurance providers operate fairly and transparently. The FCA's enforcement powers give it the ability to hold providers accountable for any violations of regulations, and its fines and license revocations serve as a deterrent to providers who may otherwise act unfairly. The FCA also provides policyholders with a means of seeking recourse if they believe that their rights have been violated, as they can make a complaint to the FCA.