Businesses have been warned that they could lose insurance on closed premises. According to a Guardian report, millions of small businesses and other bodies which have had to close up due to the coronavirus pandemic have been notified that they could be left uninsured unless they undertake a series of measures including the sealing up of letter-boxes.
The Association of British Insurers (ABI) has said that the majority of insurance companies are waiving the requirement for a business to immediately notify the insurer of their unoccupied status, in an effort to enable call centres to focus on claims processing. Several insurers have also stated they will be “flexible” on the current commercial insurance policy rule held by most commercial insurance policies which states they will cease to offer full cover on buildings unoccupied for 30 days, and some have extended the definition.
Affected bodies, however, will have to meet a long list of requirements which include visiting the property once a week and draining water tanks, if the shutdown continues. The Guardian highlighted the example of Reading Community Learning Centre where a trustee named Sarah del Tufo recently said that the charity’s landlord had informed it that its tenancy would be at risk unless it fulfilled the building insurer’s requirements.
Del Tufo said that the requirements of the AXA policy included sealed letterboxes, the gas being turned off and the sprinkler systems drained and isolated from the mains, if the property was left unoccupied. She said she does not think that many small businesses and other bodies are aware that they risk being uninsured.
“We were told in no uncertain terms that our tenancy was at risk if we didn’t follow a long list of requirements including visiting the property once a week, keeping a record of it, and removing all refuse,” she said. “Our policy states that AXA will not pay any subsequent claim unless we meet these requirements. So far it has not upgraded its policies to reflect what’s going on.”
AXA has said it will extend the unoccupied threshold to 60 days, which allows full cover to remain in place until a building has been unoccupied for over two months.
An AXA spokesperson said: “To help our customers and their tenants, AXA UK has extended the period a building can be left empty before it’s considered unoccupied to 60 days. That means full cover remains in place for 60 days, during which we ask customers contact AXA or their broker to discuss what needs to be done at the end of the period.
“In terms of security and safety measures, we will always try to be as flexible as possible in these circumstances, but this will be down to the individual risk. We strongly advise that premises be made secure and any guidance on risk management is followed, but we will not classify the premises as empty until the 60 day period has expired. We would recommend that our clients review their policy wordings to fully understand their policy cover and if they have any concerns they should phone AXA to discuss any potential problems.”
Meanwhile, The Guardian highlighted the advice of Alex Rosenfield, a senior associate at Fenchurch Law who said policyholders need to make themselves aware of any requirements set out in the policy wording.
