Unoccupied commercial property insurance

A clear guide to protection when premises sit empty

Unoccupied commercial property insurance is designed to protect a building that is temporarily empty - such as a shop, office, surgery, or warehouse without active occupation. When a premises is vacant, the risk profile changes. There is a higher chance of vandalism, theft, water damage, squatters, and unnoticed maintenance issues. Standard policies usually reduce or exclude cover after a short unoccupancy period, often around 30 days, so owners can be left with serious gaps.

Across the UK, underinsurance is a growing problem. Many commercial properties are insured for less than it would cost to rebuild today, especially with higher labour and materials costs. Studies suggest large proportions of UK commercial sites are underinsured, with rebuild cover frequently lagging true costs. This can leave a painful funding gap if a major claim occurs. For empty premises, these risks increase because claims are often more severe and take longer to resolve.

This guide explains how unoccupied commercial property insurance works, what it covers, and where limits apply. It also sets out how insurers view higher-risk periods, what you can do to reduce those risks, and how to choose cover that aligns with your building’s valuation and your tolerance for downtime. Our aim is to help you make calm, confident decisions.

Insurance can only do its job when sums insured and cover terms match the real-world risks.

If your building is empty - even for a few months - review your cover promptly and keep your insurer informed.

What is covered and how it operates

Unoccupied commercial property insurance typically offers protection for the physical structure against perils like fire, storm, flood, escape of water, theft, and malicious damage, plus public liability for incidents involving third parties on the premises. Many policies also include or offer optional cover for fixtures and fittings, plant, and landlord’s contents. Where a business operates from the site, business interruption may be available, though terms can be more restrictive during vacancy.

Cover often adjusts during unoccupancy. For example, escape of water may be excluded unless the system is drained or the property is heated to a set temperature. Theft may require forcible and violent entry, and malicious damage might be subject to stricter security conditions. Insurers commonly impose requirements such as weekly inspections with written logs, utilities isolated where feasible, letterboxes sealed, and approved locks or alarms in use. Non-compliance can affect claims.

Claims follow the usual path: notify the insurer promptly, mitigate further loss, and provide evidence like photos, inspection logs, and contractor estimates. A simple example: a vacant high street unit suffers water ingress from a burst pipe. If the system was not drained and there was no heating as required, the escape-of-water section may not respond. If it was drained and inspections are logged, settlement is far more likely to proceed smoothly. Being realistic about restrictions during vacancy helps avoid unwelcome surprises.

Who benefits most

This insurance is valuable for freeholders, landlords, and SMEs who own premises that may be empty between tenants, during refurbishment, while on the market, or awaiting planning decisions. It is also relevant for investors managing portfolios with occasional void periods, and for businesses relocating or consolidating sites that will sit unused for several months.

If a property remains occupied and your existing commercial property policy recognises continuous use, a specific unoccupied policy may not be necessary. Likewise, very short gaps may be handled by your current insurer if you notify them early and agree temporary endorsements. However, where the insurer limits or withdraws cover after a set number of unoccupied days - often around 30 - dedicated unoccupied cover helps maintain meaningful protection and meet lender requirements.

Picking a level that fits your risk

1. Essential protection

   • Core buildings cover for specified perils with tighter unoccupancy conditions.
   • Liability cover at a modest limit, typically focused on public liability only.
   • Suitable for shorter voids where robust security and inspections are feasible.

2. Standard protection

   • Wider peril set, including theft with forced entry and malicious damage.
   • Option to include landlord’s contents, fixtures and fittings, and some plant.
   • Inspection frequency and security conditions remain, but with clearer flexibility for heating or draining systems.

3. Enhanced protection

   • Accidental damage included, higher limits for buildings and contents, and improved trace-and-access for leaks.
   • Business interruption options tailored to longer rebuild times, with realistic indemnity periods.
   • Broader security clauses, potentially recognising monitored alarms and CCTV.

4. Optional add-ons

   • Extended public liability limits for higher footfall areas.
   • Employers’ liability where caretakers or contractors are engaged directly.
   • Legal expenses for possession issues and contract disputes.
   • Terrorism cover where required by lenders or leases.
   • Non-negligent works cover during light refurbishments.

Choose the level by balancing your true rebuild cost, likely vacancy duration, security measures, and cashflow tolerance for excesses.

What it might cost in the UK

*Figures reflect typical occupied market guidance. Unoccupied property insurance commonly attracts higher premiums and stricter terms. Prices vary by insurer, risk profile, and cover limits.

Can you apply and what will be checked?

Most UK freeholders, landlords, and SMEs can apply, including those with properties temporarily empty between tenants or during light refurbishment. Insurers will typically ask for the full risk address, construction details, age of building, exact unoccupied date, security features, history of subsidence and flooding, and your recent claims record. You may be asked for a professional reinstatement valuation, especially if sums insured appear low relative to current rebuild costs.

Applications can be declined where properties are in poor repair, lack basic security, or have a history of significant losses. Major works may require a separate works policy. If there is evidence of underinsurance, you may be asked to increase the sum insured or accept average in the policy wording, which can reduce claim payouts if you insure below the true cost. Early, full disclosure improves outcomes.

From quote to claim - the simple path

1. Gather recent rebuild valuation, floor area, security and occupancy details.
2. Request quotes specifying unoccupied status and expected duration clearly.
3. Compare cover limits, exclusions, excesses, and inspection obligations.
4. Choose a level and add-ons that match your risk and lender requirements.
5. Put risk controls in place - locks, alarms, weekly inspections, draining systems.
6. Buy the policy and keep an inspection log with dated photos where possible.
7. Notify the insurer immediately if anything changes or works commence.
8. In a claim, mitigate loss, document damage, and provide evidence promptly.

Weighing it up

Key checks before you commit

Confirm the buildings sum insured is based on a current reinstatement valuation, not market value. Review any average clause and understand how it would affect a partial loss. Check specific unoccupancy conditions such as weekly inspection frequency, record-keeping requirements, heating or draining expectations, and the security specification for doors and windows. Review excesses per peril and any seasonal restrictions. Business interruption should reflect realistic repair timelines, factoring in contractor availability and lead times for materials. Finally, assess renewal terms, as premiums and conditions may change if the property remains vacant longer than expected.

Alternatives worth considering

1. Short-term endorsement on an existing commercial property policy - suitable for very brief voids where your current insurer maintains adequate cover with added conditions.
2. Property owners’ insurance for portfolios - useful when multiple sites move in and out of occupancy and you need consistent terms across addresses.
3. Buildings under renovation insurance - appropriate when structural works are planned, as unoccupied property policies often exclude contractor risks.
4. Land liability insurance - a focused option if structures are demolished and only land remains, primarily covering public liability exposures.

FAQs

Q: How long can a property be empty before I need this cover? A: Many standard commercial policies reduce or withdraw cover after around 30 days of vacancy. Notify your insurer as soon as the property becomes empty so appropriate unoccupied terms can be arranged without gaps.

Q: Why is underinsurance such a problem for empty buildings? A: Rebuild costs have risen, and many sums insured have not kept pace. If you insure for less than the true rebuild value, payouts can be reduced proportionally, which can be damaging when losses are severe.

Q: What inspections do insurers typically require? A: Weekly internal and external checks, with written and dated logs. Insurers may also ask for utilities to be isolated, letterboxes sealed, and locks or alarms to be maintained. Keep photo evidence where possible.

Q: Does business interruption apply if there is no active trading? A: It can, but terms vary. Some policies offer loss of rent or cover for delays in reoccupying. If trading has paused, select an option that matches how the premises generates income.

Q: Are water-related claims covered while the property is empty? A: Often only if conditions are met, such as draining water systems or maintaining a minimum temperature. If conditions are not met, escape-of-water cover may be excluded or restricted.

Q: Will premiums be higher in high-vacancy areas? A: They can be. Local vacancy rates and crime patterns influence risk, alongside your security measures, inspection regime, and the property’s rebuild value and claims history.

What to do next

Clarify your rebuild cost with a recent professional valuation. List your security measures and how often you can inspect the site. Compare unoccupied policies that fit your timeline and obligations, then choose a level that balances risk and budget. You stay in control - take your time, read the terms carefully, and only proceed when the cover makes sense for your circumstances.

Important information

This guide is general information, not personal financial advice. Policy terms, exclusions, and pricing vary by insurer. Always read the schedule and wording carefully and confirm sums insured, conditions, and obligations before you buy or renew.