HMO tenant barricaded room and started £80,000 fire

by Readers Question

8:26 AM, 20th August 2018
About A year ago

HMO tenant barricaded room and started £80,000 fire

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HMO tenant barricaded room and started £80,000 fire

A month ago, one of my tenants in an HMO barricaded himself into his room and started a fire. He was rescued by the fire brigade, and although initially pleading mental health issues, has now been charged with arson and is on remand.

I am looking at a repair bill of circa £80,000 I think. I insured through Reich on the advice of this website, but the insurers, LV, are on the cusp of refusing liability, based on small print. I had declared the building to be an HMO, but they needed it to say “bedsit” as well, apparently. They have not said NO yet, but my loss assessor feels it is coming.

I have lost seven other tenancies as a result, and three others are living in tents in the garden. The council has imposed a prohibition order until the fire alarm is repaired/replaced, and this has been delayed at the behest of the insurers to find the cheapest option for reinstatement (before actually accepting liability ).

So my questions are:
1. Have I any other recourse other than just shelling out if LV decide to refuse liability?
2. Should one fight such a decision with lawyers or ombudsman or both should it come?
3. Any comments on the use of loss assessors? I took one on to supposedly help me in this difficult time, but he seems to be a prophet of doom more than anything else.
4. Should tenants who cannot sleep in their rooms , but still use them for storage of belongings still pay rent, maybe at a lower rate?

Ian



Comments

Ian Narbeth

9:57 AM, 21st August 2018
About A year ago

Reply to the comment left by Yvonne Francis at 20/08/2018 - 18:27
Hi Yvonne
I referred to a communal hallway. The hallway in a flat is not communal.

Ian Simpson

3:29 AM, 24th August 2018
About A year ago

Reply to the comment left by Claire Abel at 20/08/2018 - 13:40
Hi Clare

Many thanks for your comments... Have you got any details of this new Act you are referring to..? i.e. Reference to it on gov.co.uk and name of the legislation..?
We are now 38 days post-fire and still no decision on liability. Apparantly underwriters are reviewing the claim.
Fire Alarm reinstatement work has not started yet, which is the only factor keeping the building empty. More worryingly, surveyors have been told to "hold off" by the insurers. We have a contractor in who has already replaced all doors damaged by the brigade, and stripped out the fire and water damaged rooms, and their invoices are on 30 days, so will need paying soon.
Perhaps a study of the new Act by LV is what is taking so long...?

Mrs A

8:55 AM, 24th August 2018
About A year ago

Reply to the comment left by Ian Simpson at 24/08/2018 - 03:29
The Insurance Reform Act 2015
https://blog.lvbroker.co.uk/2015/04/08/insurance-act-reforms-2015-what-it-means-to-you/
https://blog.lvbroker.co.uk/2016/05/10/insurance-act-not-long-now/
http://www.legislation.gov.uk/ukpga/2015/4/contents/enacted
Your insurer will understand that any delay on their side potentially increases their liability towards your claim for rental income.
I believe that you should act as if you were uninsured to minimize the claim overall, so if you can possibly afford to go ahead with fire alarms, etc, you should, in order to get back to business asap. You can continue to discuss their liability for as long as it takes alongside this process.

Ian Narbeth

9:50 AM, 24th August 2018
About A year ago

Reply to the comment left by Claire Abel at 24/08/2018 - 08:55
"I believe that you should act as if you were uninsured to minimize the claim overall, so if you can possibly afford to go ahead with fire alarms, etc, you should, in order to get back to business asap"

Claire is trying to be helpful but you need to be careful. I appreciate you are "in limbo" while the insurers make up their minds but you don't want to find that they refuse to indemnify you, not because they avoid liability, but because you did works before you obtained their authority. Check the policy wording and speak with your broker about this. Ask the broker to intervene to negotiate with the insurers.

Ian Simpson

21:50 PM, 3rd September 2018
About A year ago

Reply to the comment left by Ian Narbeth at 24/08/2018 - 09:50
Well LV have finally admitted liability - 42 days in. An awful lot of dithering and time-wasting has cost them several £'000s in lost rent claims. If they had jumped on this from day 1, we could have re-tenanted a lot more quickly and actually saved them money! We have also lost seven good long-standing tenants, who lost patience and went elsewhere. I have worked out the policy can pay out up to 36 months of rent based on current values... I am wondering whether to bother with tenants at all until 2020 ..!!

Mrs A

22:01 PM, 3rd September 2018
About A year ago

Congratulations Ian on getting the result you needed!

David Mensah

22:03 PM, 3rd September 2018
About A year ago

Good news Ian & well done, but what a waste of time and energy for you and the tenants.

Ian Simpson

14:16 PM, 9th December 2018
About 11 months ago

Just an update on this for those who were interested.
Building work has begun and will finish in APril (2019 they assure me, not 2020). Contract value ended up at £115,000 and the culprit got given 3yrs!!
Insurer paying rents in the meantime, which is a lot better than having tenants in there... Less problems, less whingeing and far less smell from illegal smoking..!
Onward and upwards!!

David Mensah

21:01 PM, 9th December 2018
About 11 months ago

Good news! It was instructive to hear about your struggles with the insurance company. Thanks for sharing.

Mike

22:07 PM, 9th December 2018
About 11 months ago

I think though not 100% sure that landlords are duty bound to inform the insurers if there is any dispute with any of your tenants or if you have served a notice to any tenant, I have a tenant who would not want to leave unless he is physically thrown out by bailiffs, so I better notify my recent serving of a notice under S8 to him just in case he tried to do something foolish, I may even have to link my fire alarm to text alert me using a sim based alarm equipment. (remote signalling )

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