The UK is currently in lockdown with the majority of the country’s active workforce working from home. For the insurance sector, the challenges of remote working have required significant reorganizing of technology and systems to ensure the impact of current restrictions on insurance processes are limited as much as possible.
As the industry entered a lockdown, insurers were tackling hundreds of property-related claims arising from Storms Ciara and Dennis which hit the UK in February. Now the claims burden has increased further with numerous business interruption and travel-related claims resulting from actions to reduce the spread of the coronavirus. This combination is causing delays in claims reinstatements, driving up costs and slowing down processes – a situation further exacerbated by a rise in fraud and technology-based crime.
For the property sector, claims have largely been confined to wind damage to roofs and walls, falling tree damage, flooding from natural water courses and water inundation where gutters or drains have failed due to rainwater volume or runoff. This in addition to normal winter escape-of-water incidents.
Focusing on high net worth policies, coverage is generally on an all-risks basis and allows for physical loss or damage to property insured, subject to conditions, endorsements and exclusions. These conditions may include notifying a claim promptly / as soon as reasonably possible or mitigating the loss.
Typical exclusions include: losses due to inherent defects; the cost of routine maintenance; defective design or workmanship; damage from storms or floods to gates, hedges or fences; damage where a property is unoccupied, usually for in excess of 60 days; or damage caused by water or oil escaping from any fixed water or heating system, washing machine etc. if a property is unoccupied and the heating is not left on.
Insurers also require that all reasonable steps are taken to prevent or reduce loss of, or damage to, the insured property and that the building is maintained in a good condition and state of repair.
There can be a number of benefits included with such policies. Examples are: temporary alternative accommodation or loss of rent where owners or occupiers are displaced; the cost of replacing spoiled contents in refrigerators and freezers; a payment towards the cost of improvements to mitigate or prevent a future occurrence of the same loss or damage; payment for entire sets and pairs where partially damaged; emergency access repair and attributable travel costs; green rebuilding costs; landscaping and tree replacement costs; increased water and electricity reinstatement costs.
However, while such policies can provide expansive cover, no insured wants to make a claim. At Crawford, we advise that policyholders take the following steps:
- Carry out annual inspections of properties to ensure the sites are in good condition and drains and gutters are not blocked/damaged.
- If trees are located near the property and there is the risk that they could fall onto a third-party property, keep a record of inspection carried out by a professional.
- Have buildings and contents regularly valued to ensure current sums insured figures are accurate.
- Ensure that all recent purchases/improvements are noted on the policy.
- Leave the heating on when away from the property for a period of time and turn the mains water off.
- If your properties are at high risk of damage by a particular cause, have an emergency action plan in place – know where stop cocks and fire extinguishers are, which items to save first, how to remove them/make them safe, and have details to hand of emergency contractors such as plumbers.
- Have equipment serviced regularly and according to manufacturer instructions
- Seek the advice of a risk specialist for preventative and mitigation measures, particularly for high-value houses where there are valuable items on site.
- In houses with smart technology, change passwords regularly and ensure that systems are serviced and up to date.
- Consider flood and escape-of-water prevention measures such as drain back up valves and leak detection technology.
- Ensure alarms and detection systems are operational and fully serviced according to requirements.
- Do not leave easily moveable items in the open.
Given the specifics of the individual policyholder, it may be worth exploring whether it is best for all parties to agree a cash settlement based on reinstatement/replacement quotations in advance of a potential claim.
Most important of all be prepared and review the scope of your policy regularly – it is always better to find out now if you are not fully covered than when you make a claim. For more information, contact Richard Wakeham, Head of Private Clients, UK & Ireland – Richard.firstname.lastname@example.org.