Following the cold snap in December 2022, our Business Support Hub has seen a rise in enquiries from insurers about ‘escape of water’ claims in unoccupied properties.
Here, James Clements reflects on some key issues insurers need to consider when determining fair and reasonable outcomes to this type of claim.
Was the property actually unoccupied?
As an insurer, you need to consider whether the property was unoccupied or not, in line with their policy wording.
Policy wordings can differ significantly on this point. Some state the property must be slept in overnight to qualify as occupied, while others just require the policyholder to make regular visits and/or keep the property furnished.
When did the loss happen?
It’s important that you establish the date of the leak.
A policy might exclude cover once a property has been unoccupied for 30 days, but a leak was discovered on day 31. If the evidence suggests the leak started on day 29, then we’re unlikely to support an insurer applying the exclusion.
What if the property was left unoccupied due to exceptional circumstances?
We receive many enquiries about this, for example, where the policyholder has had to go into hospital or travel abroad unexpectedly.
As with any case, our service would need to consider whether it’s fair and reasonable to apply a policy exclusion. To determine if a property was left unoccupied due to exceptional circumstances, we’d need to consider factors such as:
- how long the property has been unoccupied
- whether the consumer could have made alternative arrangements
- whether the consumer had made the insurer aware the property was going to be unoccupied.
What would you have done, as an insurer, if you’d known the property was unoccupied?
Policy terms usually make it clear that a policyholder should tell their insurer about any major change in circumstances – such as a property becoming unoccupied.
Insurers are often willing to continue offering cover for a property, though they may apply some additional terms, such as:
- the heating may need to be kept on and above a certain temperature
- the property may need to be visited at certain intervals – for example, every seven days – and sometimes a record must be kept of the visits
- the heating system and water tanks may need to be drained throughout certain periods of the year (usually during the colder times, November to March) to avoid pipes freezing and bursting.
If knowing that a property was unoccupied would have meant you applying different policy terms, we would likely say that the claim needed to be reconsidered in light of these terms.
Is the consumer’s breach of the terms material to the loss?
As above, an insurer should consider a claim in line with the policy terms it would have applied, had it been told that a property was unoccupied.
However, an insurer should only decline a claim if the breach of terms is material to the loss. For example, a consumer failed to drain the water tank in the loft, but the escape of water came from a downstairs radiator. In this case, we’re unlikely to agree its fair or reasonable for the insurer to decline the claim.
Contact us if you need more guidance
If you want to talk informally about a complaint, please call or email us. We're here Monday to Friday, from 10am to 4pm, to help you resolve problems early on.