Blog Post No. 167
Insuring Second Homes vs. Principal Residences: Understanding the Nuances – George Seatter
16/06/2023
George has over 20 years of experience in the insurance industry, starting as an insurance advisor before quickly progressing to branch management and then leading various regions.
With a deep understanding of the importance of trusted advisors and the role of general insurance in protecting clients’ assets, George knows how to create bespoke insurance solutions that cater to the unique requirements of HNW clients.
To connect with this expert, email ask@www.londonproperty.co.uk or if you are a member log in to connect with George directly by clicking on his profile on this page or via ‘Hire an expert’.
Are you aware of the crucial differences between insuring second homes and principal residences? Join us in episode 2 with George Seatter, as we go through the nuances and highlight key considerations.
In this episode, George Seatter discusses the differences between insuring second homes versus principal residences. He highlights the importance of understanding the risks associated with each type of property.
Second homes, which may include properties owned by international families or individuals with multiple residences, require specialized insurance coverage. Insurers are particularly concerned about managing risks during unoccupied periods, such as potential leaks or thefts. To mitigate these risks, insurers often require regular property checks and recordkeeping during extended periods of vacancy.
Our guest also shares insights on managing client expectations and balancing their needs with insurance requirements. Additionally, he mentions innovative technological solutions, such as building control panels, that can help automate certain risk management processes. Tune in to gain valuable insights into insuring second homes and navigating the nuances between primary and secondary residences.
the podcast
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Speaker 1 0:01
Welcome to the London Property podcast, your go to source for navigating the complex and ever changing London real estate market. Our digital marketplace provides informative and educational content from industry leaders. Through podcasts and videos. We cover various aspects of the real estate experience, including buying and selling finance, law, tax construction, design, and more. Join us as we delve into the latest trends and developments in the market and gain valuable insights from our panel of experts.
Farnaz Fazaipour 0:35
Hello, and welcome to London Property, the home of super prime. I’m your host Farnaz Fazaipour. And today we’re pleased to have George Seatter back on the show for the second part of our discussion with him about insuring second home versus principal home. George, welcome back to the show.
George Seatter 0:53
Thanks. Well, it’s nice to be here.
Farnaz Fazaipour 0:54
In the first episode, we spoke to you about private client construction, where you taught me quite a few things. So let’s see what you’re gonna teach me today. So just for our listeners who may not have listened to the to the first episode that we did with you, can you just tell us a little background about what makes you someone that we can learn so much from in the insurance space.
George Seatter 1:14
So I’ve been involved in the private client insurance sector for the last 20 years, always as a broker initially working for other people. I was part of a very successful team that built Stackhouse, Poland over 15 years, I then ran the insurance business for Savills as part of SPF private clients. And I’ve been one of the original founding partners division since they launched in 2017. So yeah, I’ve been around the block a bit in the insurance world.
Farnaz Fazaipour 1:44
You have been around the block, you’re the man who keeps everybody safe. So we have you on the show, obviously, because you’ve already helped some of our members successfully in getting insurance, so thank you for that. And today, let’s talk about second homes versus principal homes. And the nuances because a lot of people probably assume insurance is insurance, but let’s talk about what’s the difference between the two.
George Seatter 2:08
So I suppose it goes back to how an insurer understands the risk. And there are different risks that are posed by a property that’s occupied as a primary residence, which is the you know, the more straightforward traditional way of insurance versus a second home. And that could be within the second home space, you know, that could be a client who’s got a London piano tear and a house in the country, or increasingly could be particularly with London, an international family, who has a property in London, in addition to other properties around the world, but the property in London isn’t their main residence, you know, it may well be that from a tax perspective, they can only be in the UK for less than 90 days a year. So in that situation, the the insurance side of things is important because they can’t tell the insurance company that the property is their main residence. If it isn’t, you know, that would invalidate any policy that’s in force. And increasingly, there are there are far fewer insurers that specialise in covering properties that are second homes, or holiday homes.
Farnaz Fazaipour 3:16
And what do insurance companies require for second homes.
George Seatter 3:21
So there’s a couple of increased risks that need to be managed. Obviously, if you’ve got a property that isn’t your main residence, the biggest area of concern for insurers is, is how those unoccupied periods are managed. And the biggest thing really, that they’re worried about is what happens if there’s a leak, you know, from a pipe, or escape of water or whatever, that goes unnoticed. For a period of two or three weeks whilst the property is empty, you know, that the level of water that could come out into a property from a leak over that period of time could cause huge amounts of damage. So so that’s the biggest thing that insurers worry about when they’re talking about second homes or, or holiday homes. There’s an increased risk. Also, from a theft perspective, you’ve got a property that’s empty for long periods of time. And it isn’t part of a well managed block, or there isn’t regular checks on that property, then it’s more at risk from being broken into the issue of squatters becomes more relevant. So it there are a number of kind of specialist insurers that we work with in that sector, but it becomes a kind of key area of how you manage those void periods when there’s no one living at the property.
Farnaz Fazaipour 4:36
Which brings me on to the subject of property managers. So presumably, you’ve come across I mean, I know this is becoming more common to have property managers that actually manage second homes, fill up the fridges, switch on the lights and do all that kind of things. So can you tell us about some of those services that you use in order for the owners to be protected and they’re in surance to be valid and not not invalidation, because of it.
George Seatter 5:04
I mean, we’ve probably gone a stage beyond that, in a sense that in order for us to obtain cover for a client, where we know that probably more relevant for a holiday home than than a weekend home, because obviously, from a weekend time perspective, the clients are going to be there most weeks, so that that manages the occupancy risk. But for those clients where there’s a property, and there’s a chance that the property would be empty for 30 days or more, it’s normally a requirement of the policy that the property will be checked on a weekly basis. So you know, that checking of the property requires either the client to do it, or an agent appointed on the client’s behalf. So we’re constantly making referrals and recommendations to property management firms so that they can pick up those weekly inspections that the insurer will require. And equally, the insurer would require that there’s a record made of those inspections, so that if they were a claim, particularly if it’s an a claim, if it’s a claim for escape of water, that the client could demonstrate that they’ve done all they could to manage the risk, you know, as best as possible,
Farnaz Fazaipour 6:18
yeah, we’ve, we’ve, we’ve come across some really good building managers. And what they do is, when I say building managers, I mean, the people who are actually managing the building with multiple units in is if someone’s going away, they actually turn off the water mains to that particular unit. Yeah, which is a really good preventative measure. But there’s also key holding companies that you could use for this kind of thing, which is a simpler version of yeah, getting the inspection done. And also, you’ve got someone who’s holding your keys.
George Seatter 6:46
I suppose the challenge is yes, in an ideal world, every time the property is left empty, if the water could be turned off it, you know, it manages that escape of water risk? Well, the challenge is, is that quite often clients are reluctant to do that, you know, they want to be able to use the property when they want to use the property, they don’t necessarily want to have to come back and find the stopcock to make sure the waters turned on. So it’s always a question of managing the kind of client requirements with with the insurance requirements and making sure that that you know that whatever process the insurer wants to be followed isn’t too onerous. Interestingly, we saw an amazing development of properties recently, at Cavendish square, where the there was a building control panel by the door of each apartment. And when the client leaves, they can just switch the property to away mode, which then automatically stops the flow of water into the property. And then when they return, they just flip it back on to to occupied, I thought that was really a really clever bit of bit of kit. And obviously, in that situation, because it’s a new development, you can instal those things at source, which will then make the management of those properties much easier. Be interesting, actually, you know, if you look at some of the developments in London in recent years, I wonder whether some of the top apartments at places like Battersea and so on, they’ve had such a high percentage of overseas purchases have actually incorporated some of those kind of clever tech solutions?
Farnaz Fazaipour 8:27
Yeah, no, I think managing property ownership for people has become a lot more seamless. And I think with technology and new developments, this is going to just keep improving. And one thing that we’ve dealt with for years is in tenancy agreements, you say was 30 days, we always had an in the tenancy agreements, if you’re leaving the property unoccupied for 28 days. Yeah, you need to, you know, make sure that some and the amount of times I’ve had to explain this to people why, why why are you telling me how to use my rental property? And it’s like, well, because the insurance will be invalidated? If you don’t. Yeah. So yeah, it is, it is something that people should really be aware of. So George, thank you very much for sharing with us the differences between the second homes and the principal homes. And we look forward to speaking to you again, and getting more insight from you.
George Seatter 9:16
Thanks very much once it’s been great to be involved. For our listeners.
Farnaz Fazaipour 9:19
If you are a member, please head over to the experts directory and log into chat to George directly. For other listeners. If you need to get in touch with George, you can send us an email and we can see how we can help you.
Speaker 1 9:34
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Transcribed by https://otter.ai
