What is insurance for unoccupied property?

Just like a regular insurance cover for the house one is living in, one can also buy a cover for a property likely to remain unoccupied for 30 days or more. This period can vary across different insurers. You could take a cover under property insurance, which covers only damage caused due to a fire. You could also opt for a home insurance package that covers 10-12 scenarios such as fire, burglary, loss of contents, etc. Even if you have purchased a regular home insurance cover and plan to keep your property unoccupied for some time, you are expected to inform the company about it.

Why the need to inform the insurer?
According to insurers, the risks related to unoccupied properties are higher since they may not be maintained in the owner’s absence. Companies satisfy claims based on their surveyor’s report, which points to the possible causes of the damage. If the property’s being vacant for more than the specified period is considered as the cause of the damage, the claim will be rejected. The customer’s absence will be considered as concealment of facts, resulting in the consequent damage.

What are the costs involved?
Typically, premiums for unoccupied properties are higher. For instance, if a home insurance cover costs Rs 200 a lakh, the same for unoccupied property will cost Rs 250 a lakh.

When it comes to insurance of an unoccupied property; if one plans to stay away for some time and informs the company about it, there might be a change in the premium, depending on the risks associated with the property. The rise will be done on a pro-rata basis, only for the period the property remains unoccupied. In case the risks are minimised through the installation of safety devices, etc, the premium need not be raised.

What are the exclusions?
The exclusions for occupied and unoccupied properties remain the same. While the scenario of a flood is considered as a natural calamity and covered, there is a deductible against it. So, five per cent of the claim amount, subject to Rs 10,000, will be deducted from the total payable claim amount.

Insurers also follow the condition of averages while covering such claims. So, customers get a amount proportionate to the insured value, irrespective of the actual value of the property. If a property is valued at Rs 5 lakh and the customer buys insurance just for Rs 1 lakh, he has opted for just 20 per cent of the total property value. In case damages cause a loss of Rs 4 lakh, the customer will be paid just Rs 80,000, which is 20 per cent.