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SCMP Reporter

BUYERS of overseas investment properties can halve their insurance premiums by taking simple safeguards against theft or damage, according to insurance experts.

 They believe many investors leave themselves vulnerable to big losses by trying to economise, or by avoiding having their properties covered.

  This is particularly the case where the owners might only visit the house a couple of times a year, or leave it for their children to use during vacations.

   Barry Lea, regional director of financial services for Hill Samuel, warns they are courting trouble.

   Mr Lea said: ''The biggest concern is those people who assume they have the necessary cover in place. There are lots of caveats which are commonly attached to policies when the house is not regularly occupied.

   ''Generally, buildings and contents insurance will lapse if your property is left empty for more than 30 continuous days, or at most, 60 days.

  ''Furthermore, if you do not intend to let your house or flat at all, preferring to leave it empty, then the risk of burglary, damage and squatters, particularly in places like London, will increase significantly.

   ''For this reason, insurers tend to take a negative view of such situations. Some will decline to provide cover, some will load the premiums or restrict cover, and others may agree to provide insurance with special conditions, such as requirements for regular inspections, security measures, switching off or draining water services.''    Expatriate property buyers should also carefully check all potential insurance liabilities before purchase.

  Mr Lea said: ''Once contracts are exchanged, the property should be insured if it is a house and not, for instance, covered by a block insurance policy. Buildings insurance is normally designed to protect against damage from accidental causes such as fire, storm, flood, theft and other standard perils. The mortgage lender will invariably be able to organise the insurance about this.

   ''But unless your solicitor tells you otherwise, insurance should be effected from exchange and not, as one might reasonably think, from completion. Under most contracts, if there was to be a fire between exchange of contracts and completion, you would still be bound to complete and in such circumstances, to say the least, the insurance would be extremely important.''   Those intending to live in their overseas home for a period should contact their insurer before returning to Hong Kong or else they run the risk of invalidating their cover.

   Some insurers will also refuse to cover a house which is empty when they come to renew.

   Other companies, such as Sun Alliance, say they will consider it on a case-by-case basis.

   In these circumstances, it is also likely that the insurer will stipulate that all locks and bolts are secured, the water supply is drained during winter and that the property is regularly visited by a neighbour or agent.

   It is possible to halve insurance premiums by ensuring that the property is not left empty for six months of the year or more.

   But those insuring a property from abroad should expect to pay higher premiums and to provide additional details, such as character references of tenants, than for a house in which they are living.

   For houses in high-risk areas, such as London, most insurers will insist on minimum security measures.

   These are likely to range from locks on basements on the ground floor or basement windows and deadlocks on external doors.

    It pays to read the small print. Most policies will include a ''reasonable care not to cause loss or damage clause''.

   This is likely to rule out cover for loss if your tenant leaves a door or window open and the contents of the property are stolen.

   It is also worth asking your insurer whether this clause extends to covering a fridge that has accidently broken or fixtures, such as carpets, which have been damaged.

   Those who want to replace broken or stolen belongings with new items should seek ''new for old'' cover.

   Much more common is the ''indemnity'' cover, which is normally cheaper, but where payments will be reduced to make allowance for wear and tear.

   Those seeking cover must also be prepared to specify valuable articles on their policies, as some insurers will limit cover on unspecified items.

  Europea-IMG has a special scheme - Expatriates UK Home Owners Scheme - which provides cover regardless of whether the property is empty or not.

   However, for a property in Britain there is an excess of around $2,900 under the buildings cover when the property is left empty, for water damage and malicious damage and theft. There is no excess under the contents section.

   Cover against theft by tenants can be included under the contents for an additional premium.

   Premiums can be reduced by security and voluntary excess discounts.



Simple safeguards often spell savings