How minor criminal convictions can invalidate a landlords insurance

I have been liaising a lot recently with someone I know whose job it is to find accommodation for people being released from prison. I wouldn’t go so far as to call them meetings, although that’s how we book them in our work diaries. In actuality we get together in the pub late afternoon, get slowly drunk and moan about our clients and mutual acquaintances. A meeting of sorts.

There is a quandary about this client group though and I thought I would run this by P118 readers as both a cautionary warning and to highlight the problems council housing bods have with Data Protection.

Its all to do with how a landlord’s insurance policies can be affected by their tenants having the most minor of criminal convictions.

A case in point

Back in 2009 Barnsley resident Michelle Barber’s house was burnt down by her estranged partner Gary Hooley, who subsequently got banged up for 4 years for arson.

She duly claimed on the insurance, £241,000 to rebuild the bungalow and her life but just before the payout was due the insurance investigators found out that in 2002 she had received a minor fine of a measly £150 for an undeclared overpayment on welfare benefits.

Spokesperson for insurers Aviva, said they would never have sold the policy to Ms Barber if they had been aware of the offence, which didn’t even involve the police and even by Mary Whitehouse’s standards didn’t exactly render Ms Barber the equal of Ronnie Biggs.

The vast majority of insurance companies will not sell a policy where people have even minor criminal offences in their recent past. On the tail of the Barber case the Guardian ran an investigative piece and rang many insurance companies asking if they could buy a policy, declaring the same fictitious small fine for dropping litter. They were refused a policy by virtually every company.

The core of the problem

This is a phenomenon known to many ex-offender charities. The Charity ‘Unlock’ has a list on their website of companies who will insure people with criminal records.

The problem for landlords is that they may well be taking on tenants with these same minor convictions, completely unaware that if they have to make a claim on their insurance they could find it invalidated by their tenant’s past actions.

The rehabilitation of Offenders Act 1974 places the responsibility on the ex-offender themselves to declare their convictions. There is a sliding scale with some offences only requiring a declaration to be made for a couple of years after release, some for 5 years and some for life. Ex-prisoners may either not be aware of the responsibility or may be too embarrassed to declare it or quite understandably, fear that a landlord wouldn’t take them on if they knew about their past.

Perhaps more problematic is the fact that a person doesn’t need to have been locked up for the insurance companies to refuse to pay out. How Michelle Barber’s £150 fine for a benefits overpayment could possibly make her more of a fire risk is beyond me. As is the Guardian journalist’s imaginary littering offence. Campaigners have been fighting for some time to get the government to lean on insurance companies about this.

All of which raises a serious moral quandary for many council workers who have close connections with their local PRS landlords. Often the council know that the person they want to place with the landlord is an ex-offender but because of the Data Protection Act they aren’t allowed to reveal this to anyone, the legal responsibility is on the offender to do that, if they don’t do it where does the council or rehabilitation officer stand?

On the one hand it seems only fair to let the landlord know, having spent ages building their trust and a 2 way working partnership, on the other hand the law prevents the organisation from revealing the information and if the ex-offender doesn’t do it this leaves the housing officer feeling dishonest and, if it all comes on top and the insurance policy is invalidated, the landlord, not unreasonably feeling that housing organisation pulled the wool over their eyes.

If the re-housing officer tells the landlord and he then decides not to let to that tenant then the client could be seriously miffed and sue the council for breaching the DPA. The individual officer getting sacked for the breach.

Luckily for my mate who works for the charity the landlords always know the background of their tenant, because they know the basis for the charity’s involvement from the get go but with councils increasingly looking to the PRS to house their applicants it is more of a grey area.

Difficult huh?

The villains of the piece

Insurance companies, as usual are at serious fault here in wanting to have their cake and eat it.

Do you remember a couple of years back when the ash cloud grounded flights for weeks? Many insurance companies, among them Aviva who were involved in the Michelle Barber case, refused to pay out on travel policies, citing small print that got them out of trouble.

Back in the 1950s Lord Denning famously put forward his idea for what he termed the “red hand rule”, saying that many contracts should have these kinds of get out clauses written in red, underlined and with a big red hand pointing to them so that customers would understand how important they were.

The only way around this problem for landlords as I see it is to ensure that their insurance policy covers people with criminal convictions just in case. They may not be the cheapest policies around but it would cover a landlord’s back if their lovely, credit-worthy tenant later turned out to be Harold Shipman.

I was myself fined £100 in breach of some daft law about 10 years ago for standing outside of a Pink Floyd gig at Earl’s Court helping a mate hand out leaflets advertising a Madonna gig he was promoting. Mind you ever since then I haven’t been able to resist carrying out a string of armed robberies for which I have never been caught. Once a recidivist always a recidivist I suppose.

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