COVID-19 – Insurance Coverage on Temporarily Unoccupied Premises

The coronavirus pandemic has created an unprecedented closure of businesses and restriction on movement in the UK and across the globe.

Within the UK many ‘non-essential’ businesses have been forced to close their doors and furlough their employees.  Service industries, wherever possible, have instructed and made provision for their employees to work remotely from home in order to safeguard their health.  Such actions have resulted in many business premises becoming temporarily unoccupied.

It is important to understand that business insurance policies include unoccupancy conditions which will automatically apply when premises are ‘empty’.  Certain policies may allow a 30 day period of unoccupancy before the conditions apply.  In any event such conditions will, typically, result in:

  • Cover being restricted to certain perils – for instance to fire, lightning, aircraft and explosion, and
  • Will require the insured to undertake certain actions including regular checks of the building and isolation of utilities (but not to the detriment of any alarm/security systems).

The UK insurance industry does, however, recognise that the country has entered a period of national crisis and certain insurers (not all) have started to react by extending the period for which they will allow premises to be unoccupied prior to imposing unoccupancy conditions; some are now providing up to 90 days with reviews thereafter.

In the event that your premises have temporarily had to close, you should contact your Insurance Broker or Adviser to ascertain what stance your insurer is taking in relation to your policy.  Increasingly, there are insurers who are attempting to assist their customers in these challenging times.

Even if your insurer is not applying unoccupancy conditions to your cover there remains a need to take reasonable and practical precautions, if these can be carried out within the scope of Government advice and restrictions. These should include:

  • Regular visits where these can be undertaken,
  • Removal of combustible waste,
  • Shutting down mains services wherever possible,
  • Ensuring that intruder and fire alarm systems, sprinkler systems, or remote monitored CCTV is fully operational (remember your policy may contain conditions relating to the continued operation of these systems), and
  • Continued operation of all physical security features including door and window locks and isolation of any electronically operated roller shutter doors.

For those businesses that require their employees to work remotely from home it is also recommended that they consult their Broker/Adviser to ensure that:

  • Any business contents such as computers are covered whilst away from the business premises, and
  • That the sum insured for (the total replacement value of all) such equipment is adequate.

Employers continue to have a duty of care for their employees working from home and some insurers are extending their cover (in some cases automatically) for Employers’ Liability and Public Liability to cover these circumstances. Again, the advice is to check with your Broker/Adviser.

All information above is correct as of 07/04/2020 and is provided by specialist Robert Cholmondeley from Sentinel Corporate Risk and Insurance Limited, who specialise in insurance protection. To visit their website please click on the link attached.