Block buildings insurance voided by insurer?

Hello everyone, a few months ago, my ground floor rental flat (part of a block of 6 flats) was extensively damaged and rendered uninhabitable by water escape from 2 flats above.

All 6 flats (including mine) are covered under the same buildings insurance policy and premium cost is split equally amongst all 6 owners. I submitted a claim to the buildings insurer for repair of the damage from the water escape. I’ve just been informed by the insurer that the claim is denied and the insurance cover voided, rendering the entire block presently, uninsured.

They explained that the insurance had been voided and the claim denied because the flat above mine (which was also damaged by the water loss and submitted a claim) had been let to the local authority, without informing the insurer. They indicated that the declarations in the statement of fact include that the property will not be sub-let or let to any housing association or local authority. Had they been made aware of the let to the local authority they would not have offered insurance coverage under any terms.

I am aggrieved and feel very unfairly treated by the insurer’s decision to deny my claim for reasons not related to me – my flat is privately let and therefore compliant with the insurance policy. The flat that caused the water escape is also privately let and compliant. I cannot see how non-disclosure/non-compliance with policy terms by one of the covered flats (not mine nor the flat that triggered the claim incident) should affect my claim and completely void the insurance leaving the entire block uninsured.

Has anyone else had this experience of denied claim/voided block insurance cover due to non-disclosure and/or non-compliance by one/some flats in the block? Does anyone have advice on legal and/or ethical grounds for me to challenge the insurer’s decision?

Thank you in advance,

Mary

Editor’s Note: Property118 insurance expert Jason McClean says: Thanks for the question. Sadly, you may not like my answer, which is the insurer is perfectly within its rights to refuse the claim based on incorrect disclosure.

Sub-let flats are a completely different and higher risk to normal let or residential flats. The tenancy agreement is not between the owner and end user. It could be any end user (refugee, asylum, vulnerable etc) due to the nature of sub-let. This makes the insurance requirement more complex with a lot fewer insurers willing or able to take this on due to the increased risk.

Any insurance is only as good as the information you disclose. If you get something like tenancy wrong by omitting a sub-let arrangement, then the insurer has every right to decline and void the policy; it is incorrect disclosure. As your insurer says, they do not offer this sort of insurance and the product is not designed to do so. It is also priced accordingly to meet standard tenancies, not sub-let, which is typically more expensive due to higher risk.

Ethically you need to provide correct and accurate disclosure for any insurance to be valid. Telling the truth accurately cannot be avoided.

The best thing you can do is get a new policy with correct disclosure on all flats. That is your responsibility as a block of flats. However, remember, moving forward you need to now note you have had insurance cover cancelled or voided. Unfortunately, as a general rule,  that will restrict markets even further for you and increase cost.

We are here to help and talk it all through if you need assistance. We may be able to get you an offer of insurance depending on further disclosure of facts. Please contact The Home Insurer and speak with Tom Chapman on the below number 01832 770965.

If you need help with any insurance, including landlord, sub-letting, or contents insurance, the best way to get a personal quote with the best price and coverage is to call the Home Insurer team at 01832 770965. 

Alternatively, you can use the form below to request one of our team to give you a call back.

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