Dont let vacant property blues put you in the red

One of the greatest worries for property investors apart from having a bad tenant is having a property fall vacant. There is no income for you to set off against your outgoings. But make sure though that things donít get any worse. Check how your insurance is affected and protect your asset, even though empty.

The first thing to review is the definition of ëunoccupancyí on your policy. Generally your property will be considered vacant if it has not been lived in for 7, 14 or 30 consecutive days depending on the insurer. If the property is empty at the time of a loss, insurers will generally ask for a copy of the last lease agreement to check the duration of the ëunoccupancyí.

Some insurers restrict cover immediately a property becomes vacant. They may also reduce cover to fire, lightening, explosion and earthquake, if the property is still vacant at policy renewal time. This sounds really on the property-owner but look at it from the insurerís point of view before we show you ways to protect yourself fully.

If a property is empty there is no one to spot broken tiles, faulty electrical switches, blocked drains or leaking gutters. Vacant premises are more likely to attract burglars, vagrants, malicious persons or even squatters.

Some insurers however provide almost full protection including ëwetí perils such as storm, flood and escape of water. So, look for these on your existing policy and when renewing. Would it be worth spending a few more pounds on your policy to have this cover?

Most insurers cannot be persuaded to continue cover for malicious damage and theft for empty premises but you can mitigate the risks yourself.

Generally your insurance policy will require you to inspect vacant premises every 7 or 14 days and to keep a record of this inspection. You should look to the terms of your policy for details but the following areas will usually need to be included:

windows and doors securely locked and any broken windows boarded up,
water system turned off and the system drained or the heating at a minimum of 58 degrees,
tidying garden or outside areas and ensure any combustible or waste material is removed
property must be maintained in a good condition
remove any letters or free newspapers

Of course the best solution is to let your property again as soon as possible. Sometimes investors hold out for a specific rental sum but this does not always make commercial sense. Weigh up the financial drain of, and the extra safeguards required for, a vacant property when calculating the rental income you want.