When you arrange insurance it is obviously important to do it properly and not give an insurer an excuse to refuse to pay out if you have a claim.
That clearly applies to all insurance although in this instance it is particularly relevant to property insurance, not just buildings, but contents insurance as well.
For many years property insurance was seen as profitable and attractive to insurers but in recent years that has changed. Insurers have been hit by storms and floods, there has been claims inflation with significant increase in the cost of building materials even before the supply chain problems of the pandemic and there have been numerous big fire claims, including the Grenfell disaster.
Property insurance is no longer seen as a money-maker and industry analysis shows that many of the larger losses have been in the higher risk category in terms of either the occupation (for the preverbal ‘fire work factory’ read plastics, timber, recycling and trade processes involving heat) or combustible building construction, particularly composite and insulation panels, with the worst risks being a combination of both high-risk occupation and construction. Corrective action is being taken in terms of premium increases, but also much tighter underwriting as regards the construction of properties.
As highlighted by Grenfell, composite or sandwich panels can be a cheap and effective construction material in terms of insulation but some are extremely flammable. Insulation material (the core) is sandwiched between two panels, generally metal, and if combustible the core can burn intensely within the panels rapidly spreading a fire around a building. Nowadays most panels used with new builds have ‘approved’ non-combustible cores, so the problem tends to be with older buildings, but as panels have been used since the 1970s becoming mainstream in the 1990s, it can be difficult to establish their exact specification and whether they are approved.
Previously, insurance surveyors were prepared to use their judgement but now, if you do not know for sure you will need to find out. That will involve finding paperwork from when the property was built and if that can’t be traced, having the core of the panel tested to confirm the type of insulation.
A survey by an insurer will provide a good argument if the panels are the wrong type following a claim (although this won’t be a complete ‘get out of jail’ if incorrect information was given) but the bigger issue will be where construction information is submitted by a proposal or statement of fact. These typically refer to buildings built of ‘brick, stone or concrete with slate, tiles, concrete, metal, or asbestos roof’ despite not relating to modern industrial unit construction, although some may refer to ‘or incombustible material’.
Unfortunately, there can be a tendency to just say ‘yes’ to these statements or questions without fully considering all aspects of a building’s construction where there may be combustible elements such as linings or flat roofs.
Policyholders have a duty to provide a ‘fair presentation of risk’ (ie accurate) and if you do not, insurers have certain legal remedies which include not paying claims and cancelling policies, so it is well worth looking back to make sure you have done so.