It seems we are in for a tough winter and teamed with the unpredictable weather we have recently experienced, Insurers are finding property claims are forever on the increase. According to BIBA (British Insurance Brokers Association), The Environment Agency has estimated that 2.4 million properties in England are currently at risk of river or coastal flooding, and there are an additional 3 million properties at risk of surface water flooding; 600,000 of these are at risk of both.
For most of us, our properties are our biggest asset’s, whether its your home, an investment or for your business, you want to protect, right? But what happens if you have failed to disclose a material fact to your insurers? And… What is a material fact? Definition: “This is a fact deemed so important that it would change the decision made by an insurer if it were kept hidden. Misinterpretation of a material fact can void a policy.” With the Insurance Act 2015 which has come into effect the onus is more than ever on the policyholder to disclose all information they consider as material.
But what could be perceived as a material fact? You wouldn’t be surprised when our clients start to look a little vague when we ask the question, “do you wish to disclose any material facts?” We have listed our top Property Owners material facts you should really consider notifying to your insurers, to avoid a potential claim being refused to help you look after your property and tenants,:
Are you in a flood area? – Flooding may not be a regular occurrence but when it happens there is considerable damage. Whether your property has suffered a flood or not, you are still obligated to notify your insurers the distance from the nearest river or watercourse. This could be anything from the ocean, river, brook or stream. Luckily, Insurers have sophisticated flood mapping systems and where your property is located will determine the premium. However, all information you can declare such as defence systems and how you have protected your property will be a considerable factor with your Insurer. Click on this link from Flood Re for a really useful guide for homes which are in a flood area and how to protect them: http://www.knowyourfloodrisk.co.uk/sites/default/files/FloodGuide_ForHomeowners.pdf
Will your property be unoccupied for more then 30 days? – As time goes on, you may change your tenants, undergo renovation, put your property on the market or various other changes. This could potentially mean the premises being vacant for a particular length of time, which is a higher risk of a Fire, Theft & Malicious Damage or Escape of Water claim for instance. For a period generally over 30 days (depending on the insurer), you will need to declare this. Insurers will usually stipulate additional clauses within your policy, such as regular inspections, water being turned off at the mains and specific security measures being undertaken.
Change of tenant? – If you own a commercial premises or a residential let property, you need to ensure you tell insurers of the type of tenant occupying the premises. For a residential landlord, you may have let your property to professional working family but now let to a group of students. If you are letting a commercial unit, the business occupying the premises could have changed to a warehouse holding stock to a business with fixed woodworking machinery. These are contributing factors to Insurers ratings and the potential risk of a claim so it’s important to let your insurers know when you are changing the type of tenant occupying the premises.
Non-Standard construction – Insurers class ‘non standard’ construction as anything that is not bricks and mortar. You may own an older property which could be made of cob with a thatched roof or you may be looking into developing a new project which could have a timber frame or floor. Either is very important to disclose to your Insurers. Obviously if you have a thatched roof, this will be a higher fire risk, but also the fact that you may have a felt flat roof for a small proportion of the property is also a material fact and if this not disclosed to you could be facing a ‘void’ claim.
Renovating Plans? – If you have just purchased a property or in between tenants and it is in need of renovating, whether cosmetic or structural, it’s always a good idea to let your insurers know. If it’s a lick of paint here and there, most insurers wouldn’t see it as an issue but some property owners may need to refit the kitchen, rewire the property, add an extension or perhaps knock some of the property down to rebuild again. The chances are that the property will be vacant for over 30 days but Insurers will also need to know the extent of the works, including the costs and length of time so they have an idea of the risks. They may exclude any damage whilst being worked upon or request details of the contractors insurance policy. As long all information is disclosed this will avoid a claim being repudiated and delay further works being undertaken on the property.
Tree’s & Shrubs – Have you considered how any nearby trees and shrubs may effect your insurance? One of the main causes of subsidence to a property is the proximity of where a tree or shrub has been planted. Usually Insurers need to know of any trees or shrubs that are within 7 metres of the property and the height of the tree being over 3 metres. (This information varies from different insurers). To ensure a subsidence claim is covered, always check this information and disclosed to insurers as this could be a very costly situation to rectify!
If you are a Property Owner and are unsure if a material fact should be disclosed, speak to your broker who will be able to give you further advise. Or contact Amy Denning on Tel No: 01392 429097 or firstname.lastname@example.org who can provide a Property Owners quotation or advise, even if you own a property that is vacant, undergoing renovation or is made of non-standard construction.
It’s better to be safe then sorry…..!