Will your insurers pay up if catastrophe strikes?

The case of a landlord who lost thousands of pounds through fire damage because his insurance policy turned out to be invalid highlights the dangers of ignoring the small print. Marcus Brown looks at how property owners can ensure they are fully protected.

How many of us could honestly say that we pore over every detail when it comes to insurance policies? Or maybe we're aware of our obligations at the time we take out the policy, but then we forget as time goes by and fail to ensure it remains valid.

Unfortunately, you can lose out when catastrophe strikes and the insurance company refuses to pay out, as in the recent case of landlord Qayyum Ansari who had insured one of his properties with New India Assurance.

When the building was later ravaged by fire the insurers refused to pay out. It pointed to a clause that had asked if the premises were protected by a sprinkler system. At the time the policy was taken out it had been so Mr Ansari answered yes.

However, the tenant who rented the building from Mr Ansari later disconnected the sprinkler system and it was inoperative at the time of the fire. The insurers were able to point to a clause in the policy which stated: "This insurance shall cease to be in force if there is any material alteration to the Premises or Business or any material change in the facts stated in the Proposal Form."

Mr Ansari submitted that switching off the sprinkler was not a "material change" to the premises but the Court of Appeal ruled against him and so his insurance is invalid.

Thousands of people find themselves in the position every year. Policies are taken out and conditions are agreed, but over time our circumstances can change and we may forget to keep up with the terms of our policies.

For example, many people now have smoke alarms in their homes and this can help keep down insurance costs. However, you then have to make sure the alarms are kept in working order or your insurance could be affected.

The same thing applies when you tell your insurers you have a burglar alarm. You should remember to put it on when you leave the house or you may find your policy is invalid if you are then burgled. Similarly, you could face problems if you tell your insurer that you keep your valuables in a safe but then leave them on the coffee table overnight.

If you tell your insurer your car is kept in a garage every night then make sure you abide by that. If you park it on the street because the garage is full of clutter then again you may have problems if it is stolen.

It's not that insurers are looking for a way to avoid paying you. They just have to compete for your business and so they keep their prices low by rewarding people who are low risk, but that means you have to fulfill your side of the bargain.

It's easy to forget the exact terms of a policy as time goes by but it's worth taking the trouble to check it occasionally. Otherwise, it could let you down just when you need it most.

For more information contact Marcus Brown on 0115 947 0641 or email: mbrown@andersonssolicitors.co.uk