AXA: Cover for premises unoccupied after 15 June due to Covid-19


Authored by AXA Commercial

Cover for businesses and premises that continue to be unoccupied after June 15th 2020, due to lockdown, staff furloughing or working from home as a result of Covid-19.

The continued temporary closure of many businesses due to the Covid-19 lockdown has significantly increased the number of unoccupied businesses and buildings. These buildings have a higher risk of damage/loss from various causes, such as water damage, arson and theft, than when occupied.

The standard AXA policies define a building as unoccupied if empty, or not being fully utilised for business purposes, for a period in excess of 30 days (please check your policy wording for full details).

In response to the current situation, we initially supported all existing customers and selected new business customers, who had to close their businesses due to the Covid-19 lockdown, by extending the unoccupancy definition from 30 to 60 days with effect from March 16th when many businesses began to close. As the pandemic continued, we then further extended this definition to cover closure up to and including the 15th June.

As lockdown restrictions begin to ease and economic and social activity increase, we are further updating our approach to the unoccupancy conditions.

Premises that are compulsorily closed

Firstly, we would like to assure all existing customers (AXA policyholders prior to the 16th March 2020) whose businesses remain compulsorily closed due to the lockdown (those who must remain closed under the Health Protection (Coronavirus Restrictions) Regulations as appropriate for England/Scotland/Wales/Northern Ireland), that we will further extend the unoccupancy definition up to and including the 15th July so no compulsory terms apply to these clients.

This benefit will also apply to those new business customers where we have previously confirmed we would extend our normal Unoccupancy terms (this will have been made clear when cover was incepted, however if you are unsure as to whether this applies to your policy your AXA branch will be able to confirm).

Businesses where the insured has chosen not to reopen the premises

For businesses where closure is not mandated, but the business chooses to remain temporarily closed, the normal unoccupancy conditions/Empty Buildings Condition of the policy will apply from the 27th June.  This requires you to declare to us where a building or premises is unoccupied - to enable our underwriters to assess the risk as presented.

For buildings which remain temporarily unoccupied, due to working from home or staff furloughing as a result of Covid-19, we will not:

  • increase the rate or premium charged, or restrict the perils covered, unless the previous loss experience illustrates an underlying cause for concern
  • require the removal of contents or stock from the premises
  • require you to seal letterboxes
  • require the water supply to be isolated at the mains and all systems drained down, unless the business plans to be closed beyond the 15th August – if this is the expectation please discuss with our underwriters.

We will however require the premises to be appropriately secured and protected as follows:

  • the building must be inspected internally and externally at least once per week.
  • all refuse and waste materials must be removed from the premises.
  • the building must be secured, and all protective locks/alarms activated.
  • any building / premises with a Material Damage sum insured larger than £5m will require an intruder alarm, to a standard acceptable to AXA, to be fitted and in use.
  • Gas and electricity must be turned-off at the mains (other than any electricity supply supporting any intruder or fire alarm, security equipment or essential servers, telephony or IT equipment)

Provided we have been notified of the unoccupancy, and the above conditions are complied with, full cover will remain in place pending any specific requirements being advised by our underwriters.  As our policy advises, if you do not comply with these conditions you will not be covered, and we will not pay your claim.

For the avoidance of doubt, businesses and premises that are mainy occupied (50% or more of the building or site) or partially open (for example a restaurant providing a takeaway service, or premises that are occupied one or two days per week), will not be regarded as empty/unoccupied.

Please note: For buildings that were empty or unoccupied prior to the 16th March 2020, for customers who have businesses or premises that are permanently closed and will not be reopening in their original form and for non-qualifying new business customers, the unoccupancy/empty buildings conditions continue to apply in full.

Your questions answered

Q.  You have mentioned “mainly unoccupied premises” (50% or more of the premises), can you explain how that is intended to apply?

A.  The intention is to identify buldings which are ‘mainly unoccupied’ based on the floor area of the building. For example, If an office block has 5 floors and only 2 are occupied it must be notified to us and we will treat this as unoccupied.  If there are 3 floors occupied (even if only one or two employees working on each floor) then we will treat this as occupied and this does not require notification. If a factory and office complex (split 80% factory, 20% office) has a reduced staff continuing to work in the factory, we will treat this as occupied, but if the factory is closed and the offices are still occupied it would be deemed unoccupied as less than 50% is in use.  

Q.  Many offices will be in office blocks and might not be able to turn off gas and electricity to support IT systems, alarms etc. - what is your approach to this?

A.  Where it is possible to isolate services, we would expect this to be done.  If it is not possible due to provision of essential services such as alarms, security equipment, servers, telecoms or other IT services, or to support occupancy of other parts of the premises, then it will be acceptable to leave essential services in place, but you should contact AXA underwriters so we can consider and agree any other actions that may be appropriate.

Q.  If a risk is not trading, but is occupied by management and staff, for example for training and compliance or cleaning, and other preparations for reopening, is this classed as unoccupied?

A.  No, we will treat this risk as occupied.

Q.  If a building is only occupied 2 days per week, will you treat this as unoccupied?

A.  No, we will treat this risk as occupied.

Q.  If a building is unoccupied and you have requested that an alarm is required, how can this be achieved?

A.  We have access to a range of specialist Risk Management services which have resources available to install temporary alarm systems in short timescales.   

Q.  For property owners’ policies, if the landlords have communicated this to the tenants and the latter fail to comply, will the landlord still benefit from the protection of the non-invalidation clause?

A.  Yes

Q.  Compliance with social distancing measures may not permit a property to be 50% occupied. If there are staff working every day, but not utilising 50% of the office space, would you deem this to be unoccupied?

A.  No, if the majority of the building is occupied, albeit on a reduced staffing basis, then we will treat the building as occupied.

Please visit our Coronavirus Hub for the latest information, and answers to more of your questions.


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