Empty homes hard to cover : One home-owner found it almost impossible to arrange insurance for a house she inherited. Maria Scott reports

WHEN the buildings and contents insurance ran out on a house that Angela Horsfall inherited from her mother a few months earlier, she discovered that the property had been covered by Municipal Mutual Insurance, the troubled company that was not renewing policies.

No other company wanted to take on the insurance, because the house was empty.

Ostensibly, the house poses no particular risk. It is a run-of- the-mill three-bedroom house near Hull, Humberside. The home has a burglar alarm, Dr Horsfall visits it every three weeks and in the meantime neighbours drop in regularly to check it. But still insurers put up a fight. Empty houses, Dr Horsfall discovered, are fast becoming a no-go area.

A spokesman for the Association of British Insurers admitted: 'Insurance companies are not anxious to take on any business other than owner-occupied houses.' Insurers have never been keen on insuring empty properties but they are even more cautious now because of their recent claims experience.

Insurers will normally consider renewing policies on a house which becomes unoccupied while they are covering it. However, it may charge an extra premium or exclude cover for certain risks, such as theft. And most household buildings and contents policies require that the insurer is notified if the property is to be left unoccupied for more than 30 days.

If there is a mortgage on the empty house, the lender would normally provide buildings cover to protect its security. But Dr Horsfall's property is mortgage- free.

Insurers say they will normally take on an empty second home. Dr Horsfall's own buildings policy is with General Accident, but after numerous conversations with the company it refused cover.

A General Accident spokeswoman said this was probably because Dr Horsfall did not have both her buildings and contents cover with the company. Normally it would require a customer to have both before insuring an unoccupied second home. Dr Horsfall also tried Legal & General, which insures the contents of her London home, and again had no luck.

She eventually found cover through Andrew Copeland Insurance Services, an agent specialising in holiday homes which arranged underwriting through Lloyd's.

The premium worked out at pounds 300 - against pounds 103 on the MMI policy. A condition of the policy was that she continue to visit the house regularly.

Peter Dibben, a consultant at Andrew Copeland, said that in general he would not want to take on a lot of this business because it is expensive to arrange.

One firm, however, has decided to specialise in insuring empty houses although it only provides buildings cover. John Holman & Sons, a Lloyd's broker, launched its Holdfast unoccupied private dwellings policy at the beginning of this year.

A spokesman said: 'We were being inundated with enquiries about this problem. There are four main types of property which we are insuring: those which have been repossessed; homes that are empty because someone has been transferred; inherited properties; and new properties awaiting sale.'

The Holdfast policy excludes protection against subsidence but covers risk from fire, lightning, explosion, flood and malicious damage, including damage from squatters.

The premiums vary depending on the risk. The minimum would be 0.5 per cent of the sum insured, so a house with a rebuilding cost of pounds 50,000 would cost pounds 250 a year. The premium could go as high as 1 per cent.

Holman insists that the house is maintained in a reasonable condition and is checked regularly. The company does not sell the policy direct to the public, only through brokers, but it can supply more information on 0268 767062.

(Photograph omitted)