Insurance will pay out, but is that right?

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  • Insurance will pay out, but is that right?

    Dear all,

    Background - Seven flats, freehold reversioner is management company and management company functions carried out in-house by (daftly volunteered) flat owner.

    I was hoping for some advice. Yesterday, the owner of one of the flats in our block informed me that a leaky toilet had caused damage to the floor of the bathroom.

    I understand that the damage has caused rot to the floorboards, and to the thermal layer of polystyrene underneath.

    The flat owner in question wants to claim the cost of repair against the building insurance.

    Having rung the insurance company this morning, they are agreeable to paying out. Normally, I would've considered the matter closed.

    However, I have other flat owners, who I have mentioned this to asking the question about whether this is something the management company should be 'paying' (even if via an insurance claim).

    The reason being is in the past we have had other electrical problems that each flat has looked after themselves. The other flat owners in question are wondering if this an lessee issue only, rather than a lessor issue.

    Is anyone able to offer any advice on this matter?

  • #2

    Having read the lease now, I suspect that the management company is liable, but would appreciate any additional thoughts.


    • #3
      From an Insurers point of view, I would be surprised if they would consider the claim. It seems clear that the toilet has been leaking for some time and rot is not normally covered under a standard buildings policy.

      ( Should point out that I have been out of the insurerance industry for over 4 years now, so may be a little rusty! )


      • #4
        Damage ( caused by lack of maintenance ) inside the leasehold flat should be repaired bythe lessee, at his own expense. The building insurance should be used for damage to shell of building and the communal areas.


        • #5
          Originally posted by Colincbayley View Post
          From an Insurers point of view, I would be surprised if they would consider the claim. It seems clear that the toilet has been leaking for some time and rot is not normally covered under a standard buildings policy.

          ( Should point out that I have been out of the insurerance industry for over 4 years now, so may be a little rusty! )
          I did find this a little strange myself, but they didn't seem too bothered. Asked me to obtain two estimates and that the excess of £250 would be payable by the management company.

          *IF* I'm going to NOT claim, I'd like to be fairly sure of the grounds here. The lease seems to indicate that maintenance and repairs will be borne by the management company. Does this seem right to people?


          • #6
            Is it covered?

            OK I'll state the obvious first, commenting on specific insurance issues is always difficult when you don't have all the information.

            Looking at this therefore from a general perspective if you've given the insurance company all the information, then it is for them to decide if its covered or not. Even if we suspect that its not covered it's always worth asking the insurers. No disrespect to insurance brokers but at best they can only interpret the policy cover, they are not normally the ones issuing the cheques (some specialists can though).

            A word of caution as your insurer may have given you false hopes by asking for two estiamtes. Many insurers don't look at policy cover until they have a claim form and estimate. If the estimate says that the damage has been caused by an uninsured event then you will not be covered. If the estimate is unclear they will ring the contractor. If the estimate is for an amount of £500+ they may involve a claims assessment company to verify the information and for claims £1,000+ they will probably appoint a loss adjustor. These claims trigger figures are not standard for all insurers.

            When you report a claim you're often not talking to the insurer, but an out of hours call centre, who do know more than advise what to do next. They have no authority to say what is and what is not covered.

            In your case the cause of the leaking toilet isn't stated. If it's maintenance issues, insurers like to call it a "gradually operating cause" or wear and tear, then you probably won't be covered. Rot is a key word here and Colin is right to say that most buildings policies don't cover this.

            Sorry to sound so downbeat with your query, but I couldn't think of something cheery to say. I'd also add that the above are just the procedural issues being followed and they are done for the better good, so nothing to be concerned about. Insurers do pay valid claims promptly. (If that last statement doesn't prompt a flood of posts, nothing will).

            As far as lessee/tenant responsibilities for damage are concerned this would normally be stated in the lease/tenancy agreement. If it's not stated then the cost of repair usually falls to the property owner. Dilapidations, wear and tear, maintenance are normally tenant issues. Fire and Flood are normally landlord issues for which they purchase insurance. Your specific responsibilities seem to be clear and isn't unusual.

            One other observation, if you have an insurer generous enough to pay out on a claim that's not covered, be careful about telling all the other residents. If you all make claims and the insurer starts to lose money overall, they WILL get you back.

            If you do proceed with the claim, let us know the outcome.


            • #7

              Following on from above:

              Claim is proceeding at the moment. Loss adjuster arrived yesterday and met myself & flat owner in question. Gave consent to proceed with the work and said he would be in touch with flat owner (not I for some reason).

              Additional questions:
              Presumably management company has a right to know what outcome of loss adjusters report will be?

              What will the loss adjuster be doing now? Filling in forms for insurance company presumably?



              • #8
                Final outcome

                Should've posted this months ago.

                Final resolution:
                Insurers paid out on basis of quotes obtained, approx £4k including loss of rent. Owner of flat did not, in end, use contractor they quoted but own labour but still received full amount. Over inflated loss of rent by about a week.

                Not happy with situation but I was unwilling to raise with insurers especially as I found out the above after claim settled.


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