With so many businesses having closed down their physical premises during COVID-19 lockdown, it is essential not to forget to check insurance cover.
Virtually all policies will provide for policyholders to advise insurers if a property is vacant and will state that a property can be left vacant only for a specified time – usually this is around 30 days. It is also not unusual for cover to be conditional on the insured carrying out basic maintenance and security tasks such as lift servicing, water management system servicing and collecting junk and other mail to minimise fire risk. This would currently be largely impossible if following the Government’s stay at home guidelines.
Some of the UK’s largest insurers have recently announced extensions of the period during which they will allow properties to remain unoccupied and hold cover. Direct Line, Allianz and AXA have extended their periods to either 60 or 90 days. Some other insurers, such as Zurich, have waived policy conditions over unoccupied status altogether.
The Association of British Insurers has stated where customers are taking “appropriate steps” to mitigate the risk of damage to an occupied property, insurers will be flexible. It is not clear what could currently be regarded as an “appropriate step” with the current lockdown guidance being against inessential journeys. We have seen commentary arguing that the larger insurance customers may receive greater flexibility than those paying smaller premiums who have to deal with the insurers’ call centres rather than enjoy individual attention.
We can envisage a raft of litigation in the months to come. We would recommend that in each case the insured checks its policy for conditions and contacts its broker or insurer to ensure that cover is remaining in place even if compliance with those conditions is not currently possible. Any confirmation given by a broker or insurer over the phone should be followed up by a confirmatory email or letter.