Landlords and agents must check insurance policies, urges NAEA Propertymark Commercial
Now is a good time for landlords and agents to check their insurance policies, urges NAEA Propertymark Commercial Panel Board Member, Michael Sears.
Commercial and residential landlords must deal with the issue of invalidated insurance claims for their leased branch, irrespective of whether it is owned or not.
The Insurance Act 2015 specifies that the insured party has a responsibility for fair presentation, which means landlords and/or their agents must unveil every material fact to insurers.
Both residential and commercial landlords and tenants would like to be paid immediately once a claim appears. However, many insurers will want to impose exclusions where they can. This is the reality of a building’s insurance claim.
Sears said: “If a commercial or residential tenant has not been given a copy of the insurance policy by the landlord or agent, they cannot conform with its conditions. Agents (being the professional) should ensure tenants receive a copy, otherwise they could be held in negligence by their client if the claim doesn’t pay out because the tenant has not complied with the insurers requirements due to not knowing about them.”
He added: ‘Do not fail to read your policy, especially its schedule.’
Claimants can be assisted with their compliance with this example checklist:
- Specify any extra, disposal or alteration that they may determine:
- Business processes or activities.
- Policyholder details such as fresh directors.
- The insured property’s correct description.
- Installations related to security or fires.
- Changes to sums insured.
- Changes to leases or tenancies.
- Times of unoccupancy.
- Providing up to date periodic inspections and gas safety certificates.
- All the following must be in place for insurers:
- Assured shorthold tenancy agreements, leases or contractual tenancies must be in place alongside a ‘How to Rent Guide’.
- Vetted tenants.
- Residential properties must be fitted with smoke and/or CO2 detectors.
- There must be matches between the name on the property tile and the policyholder’s name.
- The policyholder complies with the Regulatory Reform (Fire Safety) Order 2005 or similar laws in Scotland or Northern Ireland.
- The Right to Rent extends to residential tenants who live in the UK.
- If you are unsure about something considered as a circumstance that is material, ask your insurer.
- Changes can be made yearly, not just during renewal.
- Frequent insurers’ conditions
There are different grace periods among insurers. However, every empty site will have insurers’ conditions which must be complied with, like:
- Whenever a residential or commercial property is left empty, there must be security in place.
- Water must be drained down or heating left at a minimum of 15°C (58° Fahrenheit).
- Unless there are security concerns, electricity and gas must be switched off.
- There must be a property inspection every 30 days and recorded.
- For every 30 days, all waste/mail/refuse must be collected.
- Condition of flat roof
Once a flat roof is disclosed, insurers will often insist it is inspected by a surveyor or contractor who is a member of (as listed) but check your insurance schedule for the wording of this condition which may be imposed.
- Contractor’s liability
All contractors carrying out work on a property must carry the relevant PI and PL insurances. Defective work can mean a claim is withheld, at which point a contractor may stand to be sued. So, make sure every contractor has the requisite insurances currently in place.
- Basement disclosure
All basements must be disclosed because they are at a substantial risk of flooding.
- Kitchen duct condition
Many restaurants and take-aways have cooking fume extraction systems, yet they need independent professional cleaning roughly once per year with a certificate produced and/or invoice retained outlining the works completed. The insured party must clean filters, traps, or other grease removal devices at least once every two weeks.
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