On a recent meeting with one of our Business Managers from the Halifax Bank, I learned that the amount of Claims going through for Escape of Water had trebled in recent years, thus pushing up the price of Home Insurance across the Board.
Halifax commented that all insurance providers had been paying millions out in claims over recent years for Escape of Water. It was only 5 years ago that claims for Escape of Water were unheard of, almost non-existent.
I have thought long and hard about why this could potentially be the case, and based on my experience I have decided on the following theory.
When quoting my clients on their new Home Insurance Policies, I have to clarify how many years No Claims Discount is applicable. Many clients have declared "Escape of Water" claims to me in the last 5 years. Usually the value of the claims are quite substantial. When the water has damaged ceilings, carpets and flooring, the whole lot needs to be replaced using qualified tradesmen, as well as the rooms affected being re-decorated (more often than not the claim is on the first floor requiring building repairs to both first and Ground floors).
Anyway, when asked what has caused this damage – there it is – the answer. "A leaky radiator". In a time when Insurance Underwriters are often on Consumer based television programs for refusing claims which most of the time should be honored – here they are in the Home Insurance Industry just writing out blank cheques, and lying down while customers rip them off.
Rip them off? yes, leaky radiators surely are wear and tear 99% of the time? Wear and Tear is not covered under Home Insurance contracts. Radiators drip leak over a period of time – so where do the thousands of pounds worth of damage come from? Were they ignoring the damp brown patch pooling at the bottom of the radiator pipe for the last 12 months?
Whilst part of me agrees that if customers can get the Insurance policy to pay up – why not? Good for them – MOST of the Home Insurance buying public do not claim for Wear and Tear but are suffering the hike in Insurance Premiums across the board to counter balance it.
My opinion may seem somewhat shortsighted – there is a huge grey area called "consequential damage". This relates to the consequences of the problem being claimed for but not the item that caused it. So the Insurers will take care of everything except replacing the radiator. To be honest I still have a problem with this. The claims are huge – and this is largely due to leaky radiators being ignored by the home owner for such a long time.
I have worked in the Home Insurance Sector for many years, and I can see the Millions it's costing the industry – Fact. Exactly how it's happening and the wear & Tear stance with Radiators? – Grey area.
If I don't "get it" in full, how can we expect our customers and further more worrying – the Underwriters?
Should this article have been called – Escape of water? – Not if you'd done something about it sooner!
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