Household Insurance

Household insurance

The information below covers the frequently asked questions about obtaining household insurance.

Many charities representing people with particular needs have arrangements with specialist insurers, brokers or financial advisers who may be able to help you find suitable cover. Alternatively, the British Insurance Brokers Association runs a find a broker service which can put you in touch with specialists; similarly, unbiased.co.uk can help you identify independent financial advisers in your local area.

Bankruptcy and credit scoring

Bankruptcy, and credit scoring more generally, can be an indicator of risk and evidence shows that it is predictive of claims experience. Information collected by reference agencies to determine a credit score will typically include details of county court judgements (CCJs) and bankruptcy. As such, some – but not all – insurers use credit scores as one of several rating factors to determine risk, and a poorer credit history is likely to lead to a higher premium.

Who is covered

In order to set the premium at the right level, insurers need to understand the level of risk posed by each individual covered by the policy. In the case of home insurance, everyone living permanently at the insured address, not just the policyholder, benefits from the cover afforded by the policy. For instance, if the belongings of anyone living in a property were stolen or damaged, a claim could be made to replace them. This is the reason why information about all members of a household must be declared, as for instance in the case of a child living with a parent.

Convictions

Unspent convictions may be relevant to an insurer. Unspent convictions are defined under the Rehabilitation of Offenders Act 1974 and need to be disclosed to your insurer. The Act sets out rehabilitation periods based on the length and type of sentence imposed. Once the rehabilitation period has passed, the conviction is deemed ‘spent’ and therefore does not need to be declared to your insurer.

While it may not be immediately obvious to customers why a conviction is relevant, an insurer’s approach to pricing risk is based on their claims experience over many years. Evidence shows that unspent convictions can indicate the likelihood of making a future claim.

It is common practice for insurers to only take into account offences that are relevant to the type of cover, such as motoring offences for car insurance or arson and offences involving dishonesty for household insurance. It is important to declare all unspent convictions if you are ever in doubt. If a conviction is not relevant to an insurers’ approach to rating risk, it will not be taken into account.

UNLOCK (the National Association of Reformed Offenders) has published the following guides to help consumers buy the right insurance and make sure they are treated fairly when disclosing convictions and related offences. Both provide information about the issues people with convictions can face and what they can do about them.

• A concise leaflet
• A detailed guide

The ABI has also developed a guide for insurers on their approach. Consumers can expect that insurers following this guide will:

• provide clear information about how they use previous convictions;
• ask clear and concise questions during the application process;
• help people find cover if they are not able to provide a quote;
• ensure that customers do not face unreasonable barriers when their conviction history changes; and
• treat customers fairly when dealing with non-disclosure.

Flat roofs

Properties with flat roofs (the whole roof or just a part) tend to be more prone to weather damage and often have a shorter life span than properties with pitched tiled roofs. As a result, properties with flat roofs are more likely to generate claims than pitched roofs.

There is plenty of cover available for properties with flat roofs, but you may need to contact insurers directly or use the services of a specialist broker to find appropriate cover.

Thatched roofs

Properties with thatched roofs usually pose a higher risk than tiled roofs. This is because of the possibility of fire; while thatched roof houses do not catch fire any more frequently than houses with a tiled roof, when they do catch fire it tends to spread very quickly and is difficult to put out, causing extensive damage. So thatched roofs will often attract higher premiums and different terms and conditions (such as requiring particular safety measures) compared to tiled roofs.

Shared occupancy

Shared occupancy properties present a different risk from single household properties. This is because in shared occupancy properties, a group of individuals who are potentially unknown to each other have access to each other’s possessions, and occupants cannot always control who enters the home. As a result, the terms and conditions of cover may differ from single household properties. For example, there may be a requirement for individuals to fix a lock to their bedroom doors, or claims for theft may be excluded unless there is evidence of forcible and violent entry.

While cover is widely available for shared occupancy properties, many insurers prefer to deal with these types of risks through brokers who are able to adapt policies to better suit their customers’ needs.

High-risk flood areas

Floods can cause a great deal of damage, which can be very costly to repair. The 2007 summer floods, for example, generated £3billion of claims.

Insurers use flood risk assessment maps provided by the Environment Agency and other risk mapping organisations, together with their own claims experience, to assess a property’s flood risk.

The ABI has an agreement with the Government for insurers to continue to offer cover to as many customers as possible as long as the Government take steps to manage flood risk properly. Under the agreement, our members commit to:

• Continue to make flood insurance for domestic properties and small businesses available as a feature of standard household and small business policies if the flood risk is not significant (this is generally defined as no worse than a 1.3% or 1 in 75 annual probability of flooding).

• Continue to offer flood cover to existing domestic property and small business customers at significant flood risk providing the Environment Agency has announced plans and notified the ABI of its intention to reduce the risk for those customers below significant within five years. The commitment to offer cover will extend to the new owner of any applicable property subject to satisfactory information about the new owner.

New property developments are outside the scope of this agreement.

If your property has been flooded in the past, there are steps you can take to minimise the risk of flooding from happening again and to minimise the damage if it does happen. These are set out in the ABI’s guide to resilient repair. Such steps are likely to make it easier for you to find insurance in future, and to be quoted a less expensive premium and a lower excess than if you had done nothing.

Listed buildings

Listed buildings (those which appear on the Statutory List of Buildings of Special Architectural or Historic Interest) are often required to obtain special permissions for repairs or maintenance. Owners can be compelled to use specific (and potentially expensive) materials or techniques. Because of this, insurers may need more information about listed properties than they would normally gather on properties not on the Statutory List. This means that owners of listed buildings may need specialist help to find cover.

Coal mining subsidence

The Coal Authority is responsible for repairing damage to homes caused by coal mining subsidence. However, a history of coal mining subsidence in an area may still be a complicating factor when trying to access insurance.

As a result, customers are more likely to be able to access insurance by going through a broker or approaching an insurer directly, rather than a comparison website.

Subsidence

Subsidence occurs when the foundations of a property begin to sink. Particular problems arise when the movement varies from one part of the building to another. It can be caused by:

• Certain soils - clay soils are particularly vulnerable to subsidence since they shrink and swell depending on their moisture content.
• Vegetation - trees and shrubs take moisture from soils causing them to shrink. This is especially so during long periods of dry weather as roots extend in search of water.
• Leaking Drains - damaged drains can soften or wash away the ground beneath the foundations.

Insurers use their own claims experience to help them assess subsidence risk in a particular area. Where a property is at risk of subsidence, it may incur a higher premium and / or different terms and conditions than other properties. This is because subsidence claims can be very costly – in 2009, insurers paid out £175m against this type of claim.

While insurers cannot guarantee to maintain cover in all circumstances, it is good practice for insurers to work with customers to identify action that might be taken to manage any ongoing risks, wherever possible. The ABI has produced a guide for consumers setting out the steps they can take to manage problems arising from subsidence.

If you are thinking about buying a property at risk of subsidence, you may want to check whether the current owner’s insurer is willing to continue providing cover after the sale. Your previous claims record and your commitment (or otherwise) to continue management of ongoing risks (where appropriate) may affect the insurer’s decision as to whether to maintain cover.