Paul Robertson Investigates.
Post the tragic events at Grenfell last year many insurers have remained unusually quiet on the obvious topics of fire safety in blocks of flats. In fact most were scared to raise their head above the parapet because of the potential adverse press coverage that might ensure. I even asked for five insurers support in running an event to explore fire safety and all of the five insurers I approached declined to be involved for fear of damaging their brand. Looking back this is really sad but in view of some of the inaccurate press coverage you can understand their desire to lie low. I am glad to see that things have moved on and discussions are starting around this topic with insurers getting involved.
Shortly after Grenfell one major insurer conducted a review of all reinstatement claims in blocks of flats and re-considered the fire ratings of the materials used. In one case I saw the insurer rectify works and replaced plaster board with fire rated material as a precaution despite the fact the original plaster board was not fire rated. It is difficult to not applaud such action albeit you have to ask why did it have to take an event such as Grenfell to drive the change in thinking. After all this insurer was only doing this to protect their brand.
A worrying trend by a number (and normally the smaller) insurers has been to change their question set to try and capture information to prevent them insuring blocks of flats with composite panels. In many cases this has been badly executed and of particular concern is those insurers that have introduced wordings such as – The premises do not contain any composite insulation panels, pod construction, timber frame construction or combustible cladding/insulation. The problem is that many blocks will contain elements of this. For example many maisonettes are clad with decorative wood which effectively would make them non standard construction with this definition. In many cases the insuring party will simply not know and this could result in incorrect disclosure and potential failure of the block insurance policy.
I have been pleasantly surprised by how proactive some manging agents have been in respect of fire safety. More attention is being paid to fire safety and this can only be a good thing. The bit that concerns me personally however is how fire safety in lessee owner occupied flats remains an issue.
Legislation has seen dramatic improvements in fire safety in let flats which are subject to regulation in respect of gas safety inspections, electrical inspections along with the requirement for smoke detectors. None of this applies to lessee owner occupied flats and this has to be a concern as potentially these now are a larger threat to fire safety than let flats.
The question that I get asked the most relates to how an insurance policy will be invalidated by the actions of a lessee in respect of fire safety. Let me share with you an extract from my book – Robertson’s insurance principles for leasehold flats:
Non invalidation clause
This is a very important clause as it protects the policyholder from the actions of the lessees. A typical wording will be in the following form:
The insurance by this Section will not be invalidated by any
(1) act or
(2) omission or
(3) alteration
either unknown to You or beyond Your control which increases the risk of Damage. However, You must
(a) notify Us immediately You become aware of any such act, omission or alteration
and
(b) pay any additional premium required.
So let’s imagine that a lessee starts using a gas barbeque on their balcony. It is reasonable to assume that initially the policyholder will be unaware of this activity which will almost undoubtedly form a breach of lease. This cause will therefore prevent the policy becoming invalidated while the matter is unknown to the policyholder.
Once the policyholder becomes aware of the breach, they would normally start enforcement action to stop it. Provided that the policyholder then advises the insurers, then the policy will still operate while the enforcement action on the breach of lease is ongoing, although the insurer is within their rights to charge an increased premium. In practice most insures don’t charge the additional premium, although if they were to do so many leases would permit that increase to be claimed back from the lessee.
Robertson’s insurance principles for leasehold flats has now gone to print and you can order a copy at www.1stsureflats.com/book-release
Paul Robertson is the Managing Director of Midway Insurance and 1st Sure Flats.
