Properties FAQs

In general, we will deem the premises to be unoccupied if the ground floor is empty, or if the whole premises is empty, disused, unfurnished, untenanted or no longer in active use. This applies to residential, commercial and mixed premises.

In common with the rest of RSA, it is not within SME eTrade strategy to insure significant numbers of empty premises, particularly where the unoccupancy is long term, or the building was already empty prior to inception with us. We will accept an incidental proportion of unoccupied premises as part of a portfolio of properties on one policy, provided that they are not in an adverse arson area and have not suffered any claims relating to unoccupancy in the past.

As part of your duty to make a fair presentation of risk you should carry out a mid-term adjustment (MTA) as soon as the premises becomes unoccupied, this ensures the correct occupancy details are noted, and the correct premium is charged from day one of the unoccupancy, which will be important in the event of a claim. However the policy wording automatically provides a grace period (typically 45 days but may be longer) before certain cover events are excluded (i.e. Malicious Damage, Escape of Water, Theft, and Accidental Damage), the policy wording will also apply to the Security and Inspection conditions after this grace period, allowing the customer time to comply with these important requirements in order to maintain cover.

The system will generate a referral for this MTA and you may be asked to provide additional information such as future plans for the premises? anticipated length of unoccupancy? Are any new tenants lined up? Is any planning permission or renovation/refurbishment work taking place? Depending on the answers to these questions additional terms and cover restrictions may also be deemed appropriate.

We will assume that all residential tenancies are subject to an Assured Shorthold Tenancy of at least six months or for a leasehold of at least 12 months. We expect the tenancy agreement to be direct between the policyholder (or an agent acting on their behalf) and the tenant.

The assured shorthold tenancy is the most common form of residential tenancy in England and Wales. It is a form of assured tenancy with limited security of tenure. The equivalent in Scotland is used to be short assured tenancy. This was replaced for new tenancies in Scotland entered into after 1st December 2017 by private residential tenancy.

Where an AST or equivalent has expired or not renewed, it is often deemed to be a periodic tenancy, we will accept properties that are currently let on this form of tenancy provided that the initial term for the AST was at least six months.​

Unlike the previous short assured tenancy, and current assured shorthold tenancy, the new private residential tenancy has no minimum term and can be open ended, subject to notice periods on the landlord and tenant.

As with the predecessor and equivalents in England and Wales, it is important that some form of regulated tenancy agreement is in force. However, we will not insist on a minimum term and therefore any lack of one cannot constitute a failure to comply with our requirements for tenancy agreements in Scotland that commence or renew after 1st December 2017.

NOTE: Where an AST or equivalent has expired or not renewed and is therefore deemed to be a Periodic Tenancy, we will deem the assumption to be complied with provided that the initial term for the AST was at least six months.

The definition of Business in the policy wording states that the business must be conducted from premises based in GB, NI, CI or IOM. This is not the risk address, but the Policyholder’s own address.

The reason the policy wording includes this is because it causes RSA a number of issues if Policyholders are not based within these territories:

• If the premises become unoccupied during the policy period, it will be difficult for the Policyholder to be able to comply with the Security and Inspection of Unoccupied Buildings Policy Condition.
• In the event of a claim, it could make it difficult to communicate with the Policyholder.
• The Law Applicable Policy Condition would be difficult to enforce.

For the above reasons, these risks are unacceptable to RSA.

If the premises are managed by a managing agent based in GB, NI, CI or IOM, and an insurable interest can be established, e.g. the agreement between the managing agent and the Policyholder stipulates the managing agent is responsible for insuring the premises, then it would be acceptable for the policy to be issued in the joint names of the managing agent and the Policyholder and the address of the managing agent could be used as the Policyholder’s address.

This depends on your software house, premises type and which version of the Properties product that you are using but in general, Properties is intended for those wanting rental return from long term property ownership and tenancies. It is therefore not suitable for those owners of residential premises that also occupy most or all of the property. In order to ensure that this is complied with, the definition of Business will not permit more than 50% of any one residential premises insured to be occupied by the property owner.

NOTE: Where the customer is in the name of a residents' association, we will not deem the premises to be owner occupied unless any one member or director of the association occupies and owns more than 50% of that premises.

For wholly non residential premises, provided that the premises is owned by a different legal entity and/or the tenancy is on commercial basis with rent paid and lease or similar entered into, we will accept owner occupancy but will not be liable for losses arising from any trade or business therefrom.

This depends on your software house and which version of the Properties product that you are using but in general, we will provide cover for student tenancies but certain cover changes will apply during non-term times.

As part of the new question set for Properties launched in October 2021, the Listed Building status of the premises can be captured. We accept most types of Listed Building and a clause will be added to the policy schedule detailing conditions that must be adhered to in order for cover to be unaffected.

This depends on your software house and which version of the Properties product that you are using but in general, we will automatically provide cover for malicious damage and theft caused by the residents of any wholly or partially residential premises, subject to an additional contribution.

We automatically provide Legionellosis cover for all quotations that include property owners' liability, up to £5 million or the property owners' liability limit of indemnity, whichever is the lesser.

There is a general duty under the Electricity at Work Regulations 1989 that electrical systems should be maintained, “so far as is reasonably practicable”, in a safe condition. The regulations do not specify how this is to be achieved but the accepted practice is to adhere to the Institution of Electrical Engineers Regulations for Electrical Installations. Otherwise known as IEE Regulations. Where we deem that the type of premises is subject to the Regulations, we may make it a condition that the regulations are complied with, otherwise cover may be reduced.

We will assume that the customer does not hold any form of asbestos licence, carries out visual inspections of their property only and ensures that all asbestos contractors are appropriately licensed and insured.

This depends on your software house and which version of the Properties product that you are using but in general, we will expect that oil tanks over 200 litres are bunded to 110% of their capacity and that any waste oil heater is registered with the local authority and used in accordance with manufacturers' instructions.

This depends on your software house and which version of the Properties product that you are using but in general, we do not provide this cover.

Properties is designed for commercial, residential and mixed tenancies, as well as blocks of flats or any combination of these. For residential tenancies, the only types that are ineligible are Bed and Breakfast and Care and Support.

A full list of eligible tenants is available:

Residential Tenant Types

Asylum Seekers

This does not appear in the eTrade list of residential tenancies but this does not mean that quote requests will not be submitted for this form of tenancy.

Properties is intended for those wanting to receive a rental return from long term property ownership and tenancies. It is therefore not suitable for those customers that permit the premises to be used the transitional accommodation of those seeking asylum.

Bed and Breakfast

This is not to be mistaken for bedsits. A bed and breakfast is a business that derives its income not from the rental return received from long term property ownership and tenancies, but from the short term letting of individual rooms and the possible provision of meals, that may or may not include breakfast.

Because the letting is neither leasehold, an assured shorthold or private residential tenancy, this tenant type is not acceptable.

Some software houses have opted to include AirBnB, internet lettings or similar in their list of tenancy types. The letting of an owners' property through these channels is the same as any other form of bed and breakfast accommodation, whether breakfast or other meals are provided or not.

If the property owner derives their income from letting their property as a bed and breakfast, this is not suitable for a property owners policy. If the property owner has let their property to a tenant, and that tenant then derives income from operating a bed and breakfast, this can be considered in the same way as the letting to any other commercial tenant.

Bedsit

This does not appear in the eTrade list of residential tenancies but this does not mean that quote requests will not be submitted for this form of tenancy.

A bedsit, bedsitter, or bed-sitting room consists of a single room per tenant with all tenants sharing a bathroom. Bedsits are included in dwelling types referred to as houses in multiple occupation (HMO). Bedsits are not to be mistaken for bed and breakfast providers, which are for shorter term lets and include the provision of meals.

Bedsits are generally formed from the subdivision of other dwellings but should not be mistaken for converted flats. A flat is a completely self-sufficient unit that provides all facilities, including washing/bathing and cooking, usually in separate areas or rooms. A bedsit will generally not provide washing/bathing facilities within the room and cooking methods may be limited.

If the tenancy meets the criteria for either six months AST or 12 months leasehold and all other eligibility criteria such as construction, claims experience and geo risk are acceptable, a quotation can be provided based on the most appropriate tenant type other than Bed and Breakfast.

Care and Support

This is also called social housing and is intended to provide affordable housing to those in need or struggling with housing costs. Unlike in the private rented sector, where tenancies are offered by the landlord to whomever they choose, social housing is distributed according to the local authority's targets. Social housing is owned and managed by registered providers or social landlords.

These landlords own and manage social housing and tend to be non-commercial organisations such as local authorities or housing associations. Both of these are ineligible and so this, together with the fact that generally these tenancies are neither direct with the tenant, nor under a PRT or six month AST, mean that we will not accept Care and Support tenancies. Decline.

​Council Support and Local Authority

Because the industry standard for electronic trading does not differentiate the Council Support and Local Authority tenancies between those that are acceptable to us and those that are not, all Council Support and Local Authority tenancies are declined.

Note: Universal Credit replaced the majority of benefits payable in the United Kingdom that would previously have been submitted as Council Support or Local Authority and whilst changes to questions have been debated with Polaris and software houses, there is no agreed revision yet. In the meantime, our evaluation of the tenancy arrangement ignores the funding of the tenancy and how the landlord is paid.

If there is evidence, that can be provided in the event of a claim, that the tenancy is direct between the tenant in residence and the policyholder (landlord), then the tenancy can be reclassified to another, more appropriate residential tenancy type from this list.

Depending on your software house and which version of the Properties product that you are using, a clause is already added to require that all residential tenancies are direct between the policyholder and tenant in residence. Please ensure that you bring this to your clients' attention if it has been applied to their policy.

Holiday Homes / Accommodation

​A holiday home is a business that derives its income not from the rental return received from long term property ownership and tenancies, but from the short term letting of individual rooms or a whole house or flat.

Because the letting is neither leasehold, an assured shorthold or private residential tenancy, this tenant type is not acceptable.

If the property owner derives their income from letting their property as a holiday home or similar, this is not suitable for a property owners policy. If the property owner has let their property to a tenant, and that tenant then derives income from operating holiday accommodation, this can be considered in the same way as the letting to any other commercial tenant.

​House in Multiple Occupation (HMO)

This does not appear in the eTrade list of residential tenancies but this does not mean that quote requests will not be submitted for this form of tenancy.

Houses in multiple occupation refers to residential properties where common areas exist and are shared by more than one tenancy within the property. Common areas can include bathrooms and kitchens, but may also be just stairwells or landings.

HMOs are not the same as purpose-built blocks of flats because an HMO will have originally been intended for sole occupancy and was subsequently converted and/or sub divided. There are differing rights for the various types of HMO tenant as well as differing legislation and licensing that the landlord needs to comply with, depending upon whether they are subject to the Laws of England and Wales, or Scotland, or Northern Ireland. Failure to comply with these will not of itself constitute a breach of policy conditions or give grounds for a claim.

Because of the different tenant types that can be considered as HMO, the specific tenancy and property type should be the classified according to the available options to determine the eligibility.

Leasehold

Within the United Kingdom, there are two main forms of property ownership. Freehold describes the ownership of real property, including land and any buildings built upon it. Freehold interests in the property are transferable to heirs and assigns and may also be sold. Once sold, the previous owner, or freeholder, loses all rights to the property. The freeholder can however, let the property to others and this is generally done by granting a lease and creating a leasehold transfer.

Leasehold is where one party buys the right to occupy land or a building for a given length of time. A leasehold estate can be bought and sold on the open market. The owner of the property, or lessor, will create the lease for a fixed period giving the tenant, or lessee, the right to occupy the estate. Until the end of the lease period the lessee has the right to remain in occupation as an assured tenant paying an agreed rent to the owner as well as in some circumstances additional service or maintenance charges.

Provided that the leasehold tenancy is for at least twelve months, this form of tenancy is acceptable.

Private Rental / Residential

This should only be used where all other tenant types do not apply. Provided that the tenancy is an AST for a minimum of six months, or Periodic Tenancy that started with an AST for an initial period of six months, these are acceptable.

Neither of these should be used if the tenant type is more accurately described by one of the other options. The consequences of not doing so means that either the appropriate restrictions in cover are not applied or the rate used is inadequate, or both.

Sub Lets

This does not appear in the eTrade list of residential tenancies, nor is there a consistent approach to whether the question is asked but this does not mean that we should not clarify our approach.

We assume that all residential tenancies are on the basis of a PRT, minimum six month AST or twelve month lease, and that all properties are occupied by the tenant and not sub let. Properties is intended for those wanting to receive a rental return from long term property ownership and tenancies. Any tenancy arrangement where the policyholder and occupant of the property are not directly bound by lease or tenancy contract constitutes a sub let.

​A prime example being that the freeholder of a property sells a leasehold interest to a another party, who in turn lets that property to a further third party. If the policy is issued in the name of the freeholder and the occupier of the property is tenant of the lessee, then that would constitute a sub let.

The main exceptions to that would be where the policyholder is a residents' association, comprising the owners for the time being of the individual flats within that block and some of those owners have chosen to let their individual flats out or a block of flats owned by a management company. In these situations, we do not deem this to be sub let because the tenant is under a tenancy contract with the notional owner of that flat and issuing the policy in the same of association is a matter of legal convenience.

If the policy is issued in the name of the leaseholder, then we have a direct link between the policyholder and the occupants and would not deem that to be sub letting either.

The additional risks presented by the sub letting of residential premises are the lack of enforcement of conditions with the tenant in residence and remedies available for damage or eviction between the landlord and sub tenant. In this scenario, the greatest risk is present where inadequate vetting takes place by the tenant of sub tenants or the use by the tenant to sub let the premises for social housing with a local authority or other agency. As an insurer, we have no contractual relationship with the tenant in residence, nor the tenant of the landlord so cannot impose terms or make enquiries.

It is therefore in the landlord's interest to ensure that sub lets are not permitted. At least, if they are permitted by the tenancy or lease, then the tenant obtains consent from the landlord and ideally, the landlord can stipulate the nature of sub letting. Where this is not the case, we would ask you to bring the additional risks to your clients' attention and suggest that they or their agents consider how best to reduce them.

If some form of control does exist, then there is no action other than to record this and review whether the tenant type submitted represents the tenant or sub tenant.

For all sub lets, you should draw the Statements and Requirements relating to residential letting and tenancy types to your clients' attention and advise that we will not usually consider variation from these.

Students

​Student tenancies are acceptable subject to the usual eligibility criteria such as claims experience, sums insured and geo risk.

Because of the higher claims experience for this tenancy type, additional restrictions are applied. In addition, the standard cover for unoccupancy is amended to reflect the fact that it is more likely to be empty outside of term times.

This depends on your software house and which version of the Properties product that you are using but in general, we will only provide contract works cover for modifications and minor works to the premises where the customer is required by contract to arrange insurance cover, provided that the original Contract Price does not exceed £100,000.

This depends on which version of the Properties product that you are using but in general, we will exclude property damage to the buildings and liabilities arising from damage caused by illegal activities at any residential premises insured by the policy, unless and in respect of propagation or processing of controlled substances, additional requirements on vetting and inspections have been complied with. All new business and renewals with effect from 19 November 2021 will have a limit of £25,000 for each and every claim.

This depends on your software house and which version of the Properties product that you are using but in general, the Properties product is intended for the owners of the building, or those with an insurable interest in the building. Therefore, we deem the buildings cover to be mandatory and would not wish to provide a quotation if this was not included. This applies to requests for quotation that only include contents and/or property owners' liability.

Also, whilst Property Owners' Liability is not deemed a mandatory cover by the Industry standard for electronic trading, we believe that it is important cover for all landlords and owners of property to let. Therefore, it will be added to all quotations that we provide for a limit of £2,000,000 but other limits are available.