Businesses warned they could lose insurance on closed premises

Millions of small businesses and other bodies forced to shut their premises have been warned they could be left uninsured unless they take certain measures, such as sealing up letterboxes.

Most commercial buildings insurance policies cease to offer full cover once the building has been unoccupied for 30 days.

Insurers have said they will be “flexible” concerning the 30-day rule, and some have extended the definition.

However, affected firms, charities, and other bodies will have to meet a long list of requirements, such as visiting the property once a week and even draining water tanks, if the shutdown continues.

Sarah del Tufo, a trustee at Reading Community Learning Centre, which helps migrant women, said the charity had been told by its landlord that its tenancy would be at risk if it did not fulfil the building insurer’s strict requirements.

She said the Axa policy, which insures their building including classrooms and offices, says letterboxes must be sealed, the gas turned off and sprinkler systems drained and isolated from the mains, if left unoccupied.



“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. I don’t think many small businesses and other bodies like ours are aware that they risk being uninsured. 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,” she said.

Alex Rosenfield, a senior associate at Fenchurch Law who specialises in commercial insurance, said policyholders needed to make themselves aware of any requirements set out in the policy wording.

“Commercial policies usually impose a number of obligations, some of which may be quite onerous, which must be complied with if cover is to remain in force despite the property becoming unoccupied. We have received a number of calls from brokers seeking advice, not least because it is understandably difficult to contact insurers right now,” he said.

Following the Guardian’s intervention, Axa said it would extend the unoccupied threshold to 60 days, meaning full cover is in place until a building has been left unoccupied for longer than two months.

Direct Line said it had upped its threshold to 90 days, but said it wanted policyholders to take several additional measures.

An Axa spokeswoman said: “We strongly advise that premises be made secure and any guidance on risk management is followed. Clients should review their policy wordings to fully understand their policy cover, and to contact us if they have any concerns.”

The Association of British Insurers said most companies were waiving the requirement for a business to immediately notify the insurer of their unoccupied status, to allow call centres to focus on claims being processed.

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