NW Brown attends exhibitions and puts on property events at our offices in Cambridge and Norwich. We speak to many landlords who have queries relating to insurance. We have been shocked to find that many ‘accidental landlords’ have moved out of the home they previously lived in and not told their home insurer about the change in their circumstances.
Home insurance policies are rated on various factors including the individuals living in the home. For example, a home owner living at the premises has a greater level of control over the property compared to the same property with tenants living there. It is also important to remember that cover provided under a Home insurance policy and a Property Owners policy meet different needs.
Millions of policies are issued every year, and it is impossible for insurers to check the details of every policy to ensure the correct information has been provided to rate a risk on. It would be very expensive to do so. You can imagine the effect this would have on premiums. Policies are therefore issued as contracts based on trust (utmost good faith) between the policyholder, the insurer, and where one is involved, an insurance broker or agent.
Whilst you may not think that a minor detail will make any difference in how the insurer views the risk, it may do and in the event of a claim it may cause you considerable financial hardship. If you are not sure if something should be disclosed, you should tell your broker or insurer.
The law relating to duties of the insured changed in January 2013, under the Consumer Insurance (Disclosure and Representations) Act 2012 relating to consumers buying insurance for personal and private use. The new Act puts a duty on the private individual to take reasonable care to be truthful in response to questions asked by the insurer, and not misrepresent the facts relating to the risk before the policy begins. Insurers can avoid paying for claims where the policyholder has not been truthful.
Letting property is a business. This means that as a landlord owning one or multiple properties, the new Act does not apply. As a commercial policyholder you have a duty to provide any information that would influence an underwriter, to be open and honest, and provide all the necessary information relating to the risk, even if the information has not been asked for.
For example, the construction of a let property is important relating to the risk of fire and water damage. A flat roof for example, is more prone to water leaks compared to a pitched roof, and more likely if it is near the end of its life. The premium will reflect the increased risk, and the insurer may also apply additional requirements such as regular inspections, and maintenance. The cost of insurance may be more, but it will be significantly less than that of meeting the cost of damage when an insurer refuses to pay due to ‘misrepresentation’.
If you think you need to tell your insurer about a change, pick up the phone now to ensure your insurance will protect you in the event of a claim. NW Brown provides quotations for landlords, tenants and home owners. Please call our team on 01223 720350 for a quote.