A Guide to Insurance Compliance for Vacant Commercial Premises

According to an anonymous quote, “people who live in glass houses should take out insurance”. True, but in comparison with vacant properties, glass houses are a breeze to insure.

For an insurer, unoccupied premises are high risk. Theft, vandalism and squatting are all too common at empty properties — as are incidents such as burst pipes, electrical faults and fire.

To mitigate these risks, insurers impose strict requirements on providing cover and, crucially, paying out in the event of a claim. If you miss just one requirement, the claim can be invalid.

To help you out, this is a comprehensive guide to insurance compliance for vacant commercial premises. Now, please be aware that each insurer has different policy requirements so after reading, do seek specific guidance from your own insurance provider.

What is a “vacant commercial property”?

When your commercial property stands empty, standard insurance policies generally cover only a short period of vacancy — usually up to 30 days.

After that, you need specialist cover for an unoccupied property. This property could be:

• Empty offices awaiting sale or refurbishment
• Retail units between tenants, or entire vacant shopping centres
• Industrial units following a move-out
• Empty restaurants or pubs
• Unused factories or warehouses

Insurers class these as unoccupied properties and, as we mentioned, they have a much higher risk profile than occupied sites.

Analysing the risk

Insurance companies analyse a property’s level of risk and reflect this in the policy cost. The underwriting process is extensive — and it varies from one provider to another — but expect questions about the following:

• The building’s location, age, size and construction type
• Why it will be unoccupied, and for how long
• Utilities, maintenance, cleanliness, how you store and control keys
• Potential safety risks to third parties, including unwelcome intruders
• Any previous insurance claims
• General property management — in particular, regular inspections

Regular inspections (every 7-14 days) are usually a core policy condition. What’s more, you’ll need to prove that they’re taking place. Without documentary evidence, you can be left without insurance protection when it’s needed the most.

Common threats to vacant properties

The list of threats below explains why insurers see vacant properties as a liability.

• Unchecked water leaks and burst pipes
• Weather damage
• Arson and fire hazards
• Vandalism and theft
• Fly tipping and environmental damage
• Squatting, trespassing, criminal damage and legal disputes

These threats, and others, are the reason why regular monitoring is so crucial for keeping your insurance cover valid.

A word of warning: Even when insurance providers don’t stipulate inspections as a policy requirement, they may still reject a claim if they haven’t taken place. Cover can be voided on the grounds of negligence or, in insurance language, “failure to mitigate risk”.

Typical insurance policy requirements

To reduce the risk of claims, insurers expect proactive property management. Therefore, although each insurer is different, some policy requirements are common to most of them. We’ve provided a list below.

• Regular inspections by SIA-licensed professionals, typically every 7-14 days
• Inspection logs and reports
• Fire hazard inspections
• Time-stamped and dated photographs
• Utility checks and management — disabling unnecessary utilities
• Weatherproofing — e.g. draining down water systems or maintaining heat in cold weather
• Stringent access control — e.g. BS3621 locks, steel screens, reinforced windows, sealed letterboxes
• Active deterrents — monitored CCTV and alarms
• Removing all rubbish and combustible materials
• Cleaning gutters and maintaining grounds
• Maintaining an up-to-date key holder list

The requirements will vary from one policy to another — but remember, failure to meet just one of them could be costly. Your claim can be reduced or, in some cases, refused.

Standing up to scrutiny

To an insurer, expecting fully documented property inspections is more than just ticking the boxes.

Property inspections catch issues early. Regular monitoring reduces the likelihood that a small maintenance problem escalates into major damage. Moreover, you have a paper trail which stands up to legal scrutiny in the event of a claim. It proves that you’ve taken all reasonable steps to reduce the risk.

At CSG, we’re industry specialists in insurance compliance and property inspections for vacant sites. Our SIA-licensed personnel carry out customised inspections according to the policy requirements of your insurer. Call us on 08445 610 578 for a no-obligation chat.

Common reasons why insurance claims are denied

Forewarned is forearmed, so here is a list of the most common reasons why insurance claims are denied or reduced for unoccupied properties:

• Property inspections carried out too infrequently
• Inspections carried out by untrained, unlicensed individuals
• Logs and reports are missing, or fail to provide sufficient evidence of proactive risk management
• No time-stamped, dated photographic proof of property condition prior to the incident
• Water, gas or electricity systems left active
• Poor secure access protocols, e.g. inadequately secured windows and doors, keys left onsite
• Fire risks and hazards have gone unnoticed

It’s easy to make mistakes. Professional property inspections take the pressure off because they provide a permanent record, with photographic evidence, that you are meeting your insurer’s expectations.

How else can the CSG team help you become compliant with your insurance provider, and stay that way?

Monitored CCTV

CCTV installation is a common requirement for vacant commercial property insurance. CCTV towers are one of the most cost-effective options.

These 6-metre-high giants are quick to install and easy to remove — ideal if you need temporary CCTV cover for a vacant site. They operate on solar power and communicate via the mobile network, so there’s no need for a mains connection.

CCTV is monitored at our alarm receiving centre (ARC) where trained security personnel are available to watch over the site 24/7, or at high-risk periods such as after dark.

Monitored intruder alarms

Wireless alarms provide uninterrupted protection even when there’s no phone line or mains power. They’re quick to install and easy to move around, ideal for vacant premises.

Wireless alarms can also be integrated with CCTV, access control systems and fire alarms. Each element is interconnected, so they can be managed in one place.

Again, all CSG’s commercial alarm systems are monitored by professional responders at our ARC. If an alarm is triggered, they coordinate and manage a rapid response on your behalf.

Security officers, K9 security and mobile patrols

While manned guarding isn’t mandatory for all vacant commercial property insurance, it’s frequently stipulated for high-risk or high-value sites.

Importantly, insurers look favourably upon it. Measures such as security officers or K9 security (dog patrols) reduce the risk — and this can have a positive impact on your policy premiums.

As an affordable alternative, it’s worth considering mobile security. They travel in clearly identified, branded vehicles, patrolling the site and carrying out security checks at scheduled yet unpredictable times. For opportunistic criminals, there’s no window of opportunity.

For more guidance on insurance compliance, and a range of security measures to reduce the risk, get in touch with the CSG team. We’d be happy to help.