PRs: The Duty to Secure Proper Unoccupied Property Insurance

Probate lawyers are reminded of the importance of enquiring of the personal representatives whether the estate includes any residential property.

If so, you may need to discuss with the PRs the importance of arranging suitable unoccupied property insurance, such as Practice Enterprise’s purpose made, Watchman insurance.

The trustees’ duties

As trustees of the estate assets, the PRs have a duty to protect the estate during the administration before the final distribution to beneficiaries can take place. This duty includes ensuring any estate properties are adequately insured. The stark reality is that if an unoccupied property is not insured (or inadequately insured) and a risk materialises – the trustees will be held personally liable for any repairs as well as any resulting losses caused to the estate.

Most instances of unoccupied property arise because the owner/occupier lived alone prior to death. As an estate asset, the trustees should be advised of the risks presented if the property is likely to remain unoccupied. The risks of a property lying vacant are obvious: arson, burglary, vandalism, potential flooding and water damage and electrical faults.

Given that an estate administration – including the sale or transfer of property - can take many months (if not longer), there is the added risk of squatters. Unfortunately any insurance cover previously taken out by the deceased as policyholder is unlikely to cover the full extent of these additional risks. The existing insurer will require notice that the property has become vacant and will most likely end its cover within a certain period of the property being vacant (usually between 30 and 60 days).

The insurer may agree to continue cover but at a higher premium, which could be prohibitively expensive or apply terms that are difficult to comply with. It is sensible to consider the availability of cost-effective unoccupied insurance to cover the risks.

Thankfully, Watchman’s unoccupied property insurance scheme provides suitable insurance for residential properties forming part of a deceased estate. Mirroring a standard household policy but with simplified security and inspection requirements, it is readily available and it is simple and straightforward to set up. Cover can usually be secured the same day on an initial deposit, with no hidden charges or cancellation fees.

Watchman also offers welcome flexibility: PRs can secure cover for up to a year at a time for a small deposit and this can be cancelled at any time, which means the estate only pays for the actual days of cover required (this is calculated at a fixed daily rate). As the majority of the premium is deferred until the estate is in funds, this helpfully reduces the need to use own office funds to purchase immediate cover– in the past PRs may have sought to buy short-term policies of say 3 months at a time to minimise outgoings, a practice that is an administration burden and runs the risk of the expiry time being overlooked and an error or omissions claim on the firm’s own insurances (as some have found to their cost).

Unlike other unoccupied property policies, Watchman’s policy usually provides cover for enhanced risks such as malicious damage and subsidence.

Care should be taken to ensure the property is insured for an adequate amount. Unlike many standard house insurances where the premium is based on the number of bedrooms, unoccupied property insurers always insist on using the rebuilding cost as their limit of indemnity. Given the exponential increase in building materials of late, many properties have become under insured and for guidance on rebuilding costs we suggest contacting a local estate agent/surveyor for guidance or making an initial reference to the Association of British Insurers costs guide. For general enquiries, please phone 0207 600 3333 or email [email protected]

However, arranging suitable insurance cover is not the end of it. PRs should also be reminded of the practical steps they can take, such as securing the property, checking the property for and removing any valuables that could attract burglars, switching off utilities and asking any neighbours to report if they see anything suspicious.

Practitioners will also be interested to know that the Watchman insurance product is also available for unoccupied homes where clients are in care homes and where there is a deputyship in place.

Only available to law firms (not lay clients), for more information or a quote, contact us or call 01935 389812.


Posted on 05.08.22