THE GOOSE THAT LAYS THE GOLDEN EGGS
Will your buildings insurer accept a claim?
Much to the detriment of many home owners, buildings insurance is rarely given much thought. Unfortunately, it is not enough to take out buildings insurance and trust it will pay out in the event of damage. This is ‘risky’ business. Whilst the terms and conditions for any insurance policy is a great cure for insomnia, the devil is indeed in the detail.
To maximise profits and reduce the number of claims, insurers often require the insured to take steps to reduce the risk of a claim. This is done by carving out circumstances where a claim will not be accepted (the policy exclusions). Although the list is comprehensive, typical policy exclusions are fire damage from gradual or repeated exposure, damage by bad workmanship and damage arising when the property is left unoccupied.
It follows that if you want the golden eggs, you have to look after the goose that lays them. It is important that the insured’s building is kept repaired, maintained and compliant with health and safety requirements. For residential landlords, it is a statutory requirement that a fire safety risk assessment is instigated over common areas and that the fire safety recommendations are carried out. Apart from safety being the number one concern and the statutory consequences, if these requirements are not met, it may invalidate the insurance policy. As a result, a landlord could be stuck with a destroyed building without the capital to reinstate. Further, the landlord could potentially be sued by the tenants under the leasehold insurance covenants.
There is an old Latin principle (‘uberrima fides’ for the bookworms) which requires the insured to act in good faith. The home owner must make full disclosure of all material facts. Failure to do so can invalidate an insurance policy. For example, if you intend to carry out commercial operations from the property, but do not disclose this to the insurer and damage arises, you may be left without a claim.
Like choosing a solicitor to assist you, opting for the cheapest insurance can be a false economy. Often insurers offer to reduce the insurance premium by increasing the policy exclusions. The result is that the insurance may not provide sufficient cover. One should check what is covered when deciding what policy to take.
To conclude, it is not enough to implement buildings insurance and hope for the best. Take care of your property. It is also imperative when implementing insurance, that you are transparent with your answers when filling in the proposal form to ensure you are adequately covered.
An insurance broker is best placed to advise on a suitable buildings insurance policy. However, if you are buying a property or taking a lease, DWFM Beckman Solicitors will be pleased to work with you to ensure that you avoid the pitfalls that arise in real estate transactions.
Please contact our real estate team on 0207 408 8888 or firstname.lastname@example.org for an initial consultation or quotation.