The Broker's Guide to Handling Unoccupied Investment Properties

As an insurance broker, you know that a rental property is not always occupied by a tenant. Whether it's a gap between leases, a property undergoing renovations, or a holiday home during the off-season, unoccupied investment properties present unique challenges and risks. For your clients who are residential property investors, landlords, or owners of holiday rental properties and secondary residences, ensuring continuous and appropriate insurance is important.

At SGUA, we understand the nuances of insuring a rental property, especially when it’s vacant. This guide aims to help brokers navigate the complexities of unoccupied rental property insurance, detailing how SGUA may be able to provide comprehensive cover and assist in giving clients peace of mind.

Understanding the Risks of Unoccupied Properties

An unoccupied property is inherently exposed to different and often higher risks than an occupied one. Without the regular presence of a tenant, issues like water leaks, unnoticed damage, or even squatting can escalate quickly. Additionally, the risk of theft and vandalism can increase significantly. Traditional rental property insurance policies often have clauses that limit or exclude cover when a property is vacant for an extended period. This is where specialised knowledge and a flexible underwriting agency like SGUA can be valuable.

SGUA's Approach to Unoccupied Property

At SGUA, we underwrite a comprehensive suite of property insurance policies designed to cater to various circumstances, including periods of unoccupancy. Our goal is to help ensure your clients’ valuable investment is always protected against diverse risks, minimising potential financial loss, subject to the terms, conditions, limits and exclusions of the policy.

Policy Limits and Conditions for Unoccupied Properties

When a rental property becomes unoccupied, it is crucial to understand how the existing insurance policy might be affected. Standard landlord insurance policies are typically designed with the expectation that a tenant will occupy the premises. However, SGUA's policies are structured to offer options for continued protection, even during vacant periods. Here's what brokers and their clients need to be aware of:

• Notification is key: It is essential to advise SGUA (through our broker platform) as soon as a property becomes unoccupied for an extended period. This allows us to assess the situation and confirm the appropriate cover provided.
• Specific unoccupied period provisions: While the exact duration varies depending on the specific product, we generally offer terms that may be more flexible than many general insurers. It’s important to review the relevant Product Disclosure Statement (PDS) for the precise wording and any applicable waiting periods or limitations.
• Maintenance requirements: During periods of unoccupancy, it is critical to ensure the property is well-maintained and regularly inspected. This helps mitigate risks like burst pipes, electrical faults, or unnoticed damage, which can lead to significant repair costs.
• Security measures: Maintaining adequate security, such as locking windows and doors, and potentially installing additional security systems, can be crucial in preserving cover against theft and vandalism.

Optional Covers for Improved Protection

To provide additional protection for unoccupied properties, SGUA offers several optional policies that brokers can recommend to their clients. These tailored solutions address the specific needs that arise during vacant periods:

• Malicious damage by unknown persons: While standard policies might cover malicious damage by tenants, an unoccupied property is vulnerable to damage from trespassers or vandals. This optional cover is designed to protect against such risks.
• Theft and unoccupied property: As mentioned, the risk of theft increases when a property is vacant. This optional cover specifically addresses this exposure, providing financial protection against stolen fixtures, fittings, or even appliances left in the property.
• Loss of rent: If an insured event (like a fire or significant storm damage) renders the property uninhabitable during an unoccupied period, this cover can provide for the potential loss of rental income that could have been generated. This helps maintain the financial stability of the property investment.
• Building insurance: For landlords, building insurance is important. Our landlord's residential building insurance specifically covers the structure of the investment property against natural disasters, fire damage, and accidental damage, and certain other insured events as set out in the PDS, which can be important even when the property is unoccupied.

Compliance Advice for Brokers

Navigating the complexities of unoccupied rental properties requires careful attention to compliance and adherence to regulations. As a broker-friendly underwriting agency, SGUA is committed to providing brokers with the tools and information they need to best serve their clients. Here are a few tips that can help your clients:

• Educate your clients: Proactively educate your clients about the importance of notifying you when their property becomes unoccupied. Explain the potential consequences of not doing so, including the risk of a claim being denied.
• Review policy wording carefully: Before recommending an insurance product, always review the specific policy wording related to unoccupied properties within the Product Disclosure Statement (PDS). This ensures you understand the limitations, exclusions, and conditions.
• Recommend regular inspections: Advise your clients to arrange for regular inspections of their unoccupied properties. This not only helps maintain the property but can also be a requirement for certain cover to remain valid.
• Consider risk mitigation strategies: Encourage clients to implement risk mitigation strategies such as turning off the water supply, checking smoke detectors, and informing neighbours of the property’s vacancy.

Protect Your Clients with SGUA

For brokers, partnering with SGUA can mean offering your clients robust, flexible landlord insurance that adapts to changing circumstances, including periods of vacancy. Visit our website and discover how SGUA can help you protect your clients. We are here to support your business and help your clients navigate the complexities of insuring a rental property, whether occupied or not.

Disclaimer: General advice provided on this website does not take into account your objectives, financial situation, or needs. Please read the relevant Product Disclosure Statement, Financial Services Guide and Target Market Determination available from us to consider whether our product is right for you. Benefits are subject to terms and conditions, including excesses, limits, and exclusions of your policy.