Overview
The insurance industry is committed to supporting customers who are in the process of an ongoing buildings insurance claim. In some circumstances, where a customer’s property has been significantly damaged, the repair process may take many months. Therefore, a customer may need to renew their buildings insurance cover before the repair process has been fully completed, or whilst works are ongoing.
In the event that a property still requires significant repair work from previous damage, other insurers are less likely to be willing to provide cover until the repair process is complete and the property is considered to be in a good state of repair. If the customer’s existing insurer was to not offer to renew cover during the repair process, then the customer could be left uninsured for a number of months. This is not a good customer outcome and something which the ABI is seeking to avoid where possible.
This ABI good practice guidance sets out an approach to provide reassurance to customers that their existing insurer will use their best endeavours to offer to maintain cover until the repairs on their property are completed. All decisions on pricing, terms or conditions remain at the discretion of individual insurers.
Scope and application
This good practice guidance has been produced for ABI property insurance members and applies to the situation where a domestic or commercial buildings insurance policy ends while the property is undergoing repairs.
This guidance was published on 24 August 2021 and is effective for new and ongoing claims from this date. It will be reviewed and, where appropriate, updated periodically.
ABI property insurer approach
Where a claim arises for damage to a customer’s property, and the repair process is being carried out under the insurer’s direction or with their approval, and that repair process will not be fully completed before the customer’s buildings insurance policy is due for renewal, the insurer will seek to offer to maintain cover for the customer until the repair work is complete. Whilst insurers cannot guarantee to maintain cover in all circumstances, ABI property insurance members agree it is good practice to offer to maintain cover wherever possible and will use their best endeavours to achieve this. There may be circumstances where it is not appropriate to offer to maintain cover, or the insurer may not be able to provide full cover, for example where the claim involves non-standard structures or complex rebuilds where the full reinstatement may take several years. Insurers reserve the right to make a commercial decision to maintain cover depending on the particular circumstances and the individual insurer’s risk appetite.
A customer who is part way through the repair process at the point at which their buildings insurance policy ends may still elect to seek alternative cover from the insurance market, even where their insurer offers to maintain cover.
This good practice guidance will not apply where a customer has accepted a cash settlement as, in those circumstances, it is the customer’s responsibility to manage the repairs process themselves. This will be explained to customers who are considering accepting a cash settlement. ABI member insurers have agreed to a set of best practice principles when offering cash settlements to customers after a flood which includes clearly informing customers of the potential implications of accepting a cash settlement.
Where an insurer agrees to offer to maintain cover, the insurer will make it clear to the customer what the policy provides cover for and how cover will be maintained, whether by extending the existing policy period for a specified period of time to cover the repair process (where operating processes allow) or renewing the policy for an additional policy period of 12 months where more appropriate. Where the policy period has been extended for a specified period of time (e.g. three months), the customer will have cover for this full period even if repair work is completed in advance of the extension ending. The customer will need to pay a premium for the period of the extension and will be required to allow the insurer to progress the repair process in a timely manner.
Once the repair works are completed, and the current cover period has come to an end, the customer may need to seek alternative cover from the insurance market should the insurer decide not to offer to renew the policy. If the customer has any difficulty in finding alternative cover, they may want to contact the ‘Find Insurance’ service offered by the British Insurance Brokers’ Association who should be able to assist in finding specialist cover to suit their needs.