Why a ‘standard’ home insurance policy may not suffice

Normal home insurance may not sufficeNormal home insurance may not suffice []

If you’re wondering what your neighbours have to do with your home insurance policy then consider this.

Its winter, you’ve gone into your loft for a rummage and you notice the supporting wall of your house – the wall you share with your neighbour – is wet. You look around but can’t find water coming in from your own house but find the damage is being caused by a leak in the roof of the neighbouring property.

Poor property maintenance by neighbours, floods and storms, are just some of the ways your property can be damaged through no fault of your own and such claims are far from uncommon. The Association of British Insurers (ABI) says claims relating to weather damage totalled a whopping £589 million in the first three quarters of 2010.

It’s not until something like this happens, that you’re likely to consider how a neighbouring property can damage your home and what part your home insurance cover plays, but when renewing or taking out buildings insurance it’s worth asking a few questions about what the policy does and doesn’t cover.

You may be surprised to find out that a ‘standard’ home insurance policy may not always pay claims that relate to a neighbouring property, particularly if the cause is poor maintenance or is weather related.

If you do find yourself in this situation, quickly inform your own home insurer which will want to establish the cause of the claim and whether the damage is covered under the terms and conditions of your policy.

It will assess if the claim is down to wear and tear, storm or flood damage. If the cause is covered, the insurer will pay for the repairs or arrange for them to be carried out.

Insurer More Than says that commonly, the homeowner can claim on their home insurance for damage by a neighbouring property, and if the neighbour was found liable for causing the damage, the insurer would then set about recovering the costs from the neighbour’s insurer.

But if your insurer decides the damage is not covered by your policy it then becomes a little murky.

Swiftcover says it would honour a claim for damage caused by a neighbouring property - however other insurers – such as Sheila’s wheels – take a different stance and say it must first be decided if the claim falls under the ‘insured perils’ of a policy or accidental damage.

To decide whether to pay a claim, the insurer assigns a claims handler who will assess if the damage was caused by any of the ‘insured perils’ listed in the policy which are things like storms, floods and earthquakes. Weather reports are used to verify the

conditions at the time of damage. If the cause cannot be attributed to an insured peril, such as a storm, then a claim could be made under the ‘accidental cover’ of a policy, but again, what is covered here varies from insurer to insurer and there are exclusions.

If you have a policy with Sheila’s Wheels for example, it’s likely you still wouldn’t be able to make a claim under accidental damage as its list of exclusions mean that if the damage was caused by atmospheric conditions, such a scenario would not be covered.

It is not alone in this approach to such claims though.  Nationwide’s standard home insurance, won’t cover a wet wall if it has come about due to a neighbour’s leaking roof. However, it does say that if a customer had accidental damage cover they would be able to make a claim under that part of the policy.

If a claim has been refused by your insurer there are still other avenues you can pursue. Take action with the neighbour directly making them aware of the damage and seek to come to agreement to meet the costs or repair.

If this proves unfruitful, check if you have legal expenses cover on your home insurance policy.  Most legal expenses policies provide cover for ‘property protection’ which, in principle, should cover the cost of taking legal action against the neighbour.

Spokesman for Nationwide, Mike Pitcher says: “Such disputes can frequently be resolved through discussion but sometimes a solicitor’s letter may move things along faster.”

To avoid a home insurance dispute and problems with claims, the Association of British Insurers says prevention is always better than cure and advises that when homeowners first notice signs of damage or the possibility of damage from a neighbour’s property, that they inform the neighbour in case they are not already aware themselves.

“A homeowner should always keep a record and photographic evidence, all of which should be dated as the damage develops which can be used as evidence for their insurance claim,” said spokeswoman, Rachael Sharrocks for the ABI.

The ABI also confirms that if a homeowner is having difficulty getting a claim approved from either parties’ insurer, then they should consider using legal expenses cover if it is included in their policy.

The ABI adds: “If the homeowner wishes to take legal action to help solve the dispute or sue the neighbour for damages, then the legal expenses may cover this.”

If you do find yourself in the position of not having a claim approved and do not have legal cover on your policy, then you can contact the Citizens Advice Bureau who offer a free advisory service on a range of issues including neighbour disputes.

Sharon Flaherty is the editor ofConfused.comand personal finance expert.

Category: Insurance Policy

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