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Ignore the small print at your peril

A Devon couple claimed to have been miss-sold insurance after being told they can’t claim for damage caused by tenants. The tenants, who appear to have been operating a cannabis farm within the property, caused £56,000 of damage which the insurance company is refusing to cover.

Having retired from the Royal Navy, the property owner and his wife decided to move to Jerusalem to volunteer with a Christian charity. They let out the house to a local couple and informed their insurance company who sold them a contents policy.

Some two years later, one of the tenants lost his job and the couple stopped paying rent. The owners flew back to inspect their property, only to find the tenants had boarded themselves in and strewn furniture and detritus across the garden. It took five months to have the tenants evicted and to their horror, the owners found that the house had been severely damaged by both heat and water: it appeared that the property had been used as a cannabis factory.

They contacted the local police who said it was an issue for their insurers. However, the underwriters refused to pay out, citing small print that excluded any loss or damage caused by persons lawfully in the home, or malicious damage by tenants. The Financial Ombudsman also upheld this decision, based on the small print in the policy.

The owners feel that the insurance broker sold them a product which was not suitable for a tenanted property. The argument underlines the importance of reading the small print in any agreement. With many terms and conditions using more words than contained in George Orwell’s ‘Animal Farm’, this is not always an easy task – but it is vital to protect yourself and your property.

Some simple principals to exercise when looking at insurance for tenanted accommodation include:

  • Check that the buildings insurance rebuilding cost is accurate.
  • Does the maximum limit for your contents insurance cover everything you own?
  • Are valuable items excluded – check the single item claim limit on your policy.
  • Make sure you are honest with your insurance company – not declaring something which may be relevant is as serious as not telling the truth, and could result in your claim being rejected.
  • Has anything changed? Your policy may be null and avoid if you don’t inform your insurers you have let your property to new tenants, possibly DSS or those with a criminal record.
  • Obtain a credit check, references and as much information as you can on your prospective tenants before you sign the deal.

The sums in this case are very large - £56,000 of damage is a vast amount of money, but in order to make sure you are thoroughly covered, get expert advice from a company with experience in landlord situations, and do all that you can to make sure you don’t rent out your property to undesirable tenants.

Contact Westhill Insurance Services, today.

Posted on 17th November, 2014