How minor criminal convictions can invalidate a landlords insurance

by Ben Reeve-Lewis

19:50 PM, 30th December 2011
About 7 years ago

How minor criminal convictions can invalidate a landlords insurance

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How minor criminal convictions can invalidate a landlords insurance

I have been liaising a lot recently with someone I know whose job it is to find accommodation for people being released from prison. I wouldn’t go so far as to call them meetings, although that’s how we book them in our work diaries. In actuality we get together in the pub late afternoon, get slowly drunk and moan about our clients and mutual acquaintances. A meeting of sorts.

There is a quandary about this client group though and I thought I would run this by P118 readers as both a cautionary warning and to highlight the problems council housing bods have with Data Protection.

Its all to do with how a landlord’s insurance policies can be affected by their tenants having the most minor of criminal convictions.

A case in point

Back in 2009 Barnsley resident Michelle Barber’s house was burnt down by her estranged partner Gary Hooley, who subsequently got banged up for 4 years for arson.

She duly claimed on the insurance, £241,000 to rebuild the bungalow and her life but just before the payout was due the insurance investigators found out that in 2002 she had received a minor fine of a measly £150 for an undeclared overpayment on welfare benefits.

Spokesperson for insurers Aviva, said they would never have sold the policy to Ms Barber if they had been aware of the offence, which didn’t even involve the police and even by Mary Whitehouse’s standards didn’t exactly render Ms Barber the equal of Ronnie Biggs.

The vast majority of insurance companies will not sell a policy where people have even minor criminal offences in their recent past. On the tail of the Barber case the Guardian ran an investigative piece and rang many insurance companies asking if they could buy a policy, declaring the same fictitious small fine for dropping litter. They were refused a policy by virtually every company.

The core of the problem

This is a phenomenon known to many ex-offender charities. The Charity ‘Unlock’ has a list on their website of companies who will insure people with criminal records.

The problem for landlords is that they may well be taking on tenants with these same minor convictions, completely unaware that if they have to make a claim on their insurance they could find it invalidated by their tenant’s past actions.

The rehabilitation of Offenders Act 1974 places the responsibility on the ex-offender themselves to declare their convictions. There is a sliding scale with some offences only requiring a declaration to be made for a couple of years after release, some for 5 years and some for life. Ex-prisoners may either not be aware of the responsibility or may be too embarrassed to declare it or quite understandably, fear that a landlord wouldn’t take them on if they knew about their past.

Perhaps more problematic is the fact that a person doesn’t need to have been locked up for the insurance companies to refuse to pay out. How Michelle Barber’s £150 fine for a benefits overpayment could possibly make her more of a fire risk is beyond me. As is the Guardian journalist’s imaginary littering offence. Campaigners have been fighting for some time to get the government to lean on insurance companies about this.

All of which raises a serious moral quandary for many council workers who have close connections with their local PRS landlords. Often the council know that the person they want to place with the landlord is an ex-offender but because of the Data Protection Act they aren’t allowed to reveal this to anyone, the legal responsibility is on the offender to do that, if they don’t do it where does the council or rehabilitation officer stand?

On the one hand it seems only fair to let the landlord know, having spent ages building their trust and a 2 way working partnership, on the other hand the law prevents the organisation from revealing the information and if the ex-offender doesn’t do it this leaves the housing officer feeling dishonest and, if it all comes on top and the insurance policy is invalidated, the landlord, not unreasonably feeling that housing organisation pulled the wool over their eyes.

If the re-housing officer tells the landlord and he then decides not to let to that tenant then the client could be seriously miffed and sue the council for breaching the DPA. The individual officer getting sacked for the breach.

Luckily for my mate who works for the charity the landlords always know the background of their tenant, because they know the basis for the charity’s involvement from the get go but with councils increasingly looking to the PRS to house their applicants it is more of a grey area.

Difficult huh?

The villains of the piece

Insurance companies, as usual are at serious fault here in wanting to have their cake and eat it.

Do you remember a couple of years back when the ash cloud grounded flights for weeks? Many insurance companies, among them Aviva who were involved in the Michelle Barber case, refused to pay out on travel policies, citing small print that got them out of trouble.

Back in the 1950s Lord Denning famously put forward his idea for what he termed the “red hand rule”, saying that many contracts should have these kinds of get out clauses written in red, underlined and with a big red hand pointing to them so that customers would understand how important they were.

The only way around this problem for landlords as I see it is to ensure that their insurance policy covers people with criminal convictions just in case. They may not be the cheapest policies around but it would cover a landlord’s back if their lovely, credit-worthy tenant later turned out to be Harold Shipman.

I was myself fined £100 in breach of some daft law about 10 years ago for standing outside of a Pink Floyd gig at Earl’s Court helping a mate hand out leaflets advertising a Madonna gig he was promoting. Mind you ever since then I haven’t been able to resist carrying out a string of armed robberies for which I have never been caught. Once a recidivist always a recidivist I suppose.



Comments

21:01 PM, 31st December 2011
About 7 years ago

I am wondering whether these circumstances you have mentioned might affect RGI policies taken out on these tenants and yes I will be contacting the managing agents and their present block insurers to ascertain what the situation might be on buildings repair if the tenant that may have passed an RGI check may have offences which would prevent the buildings insurers paying out to repair my flat.

Ben Reeve-Lewis

10:22 AM, 1st January 2012
About 7 years ago

I dont know about RGI but I would definately check Paul, the devil being in the detail and all that

20:04 PM, 1st January 2012
About 7 years ago

Your post regarding these insurance issues has raised some important and very concerning issues for me.
Thankyou for your very constructive post as it would not have occurred to me to even enquire.
I will do as you have suggested and hope to give you some feedback as to what I will have been advised by my respective insurance companies
If the Rehab of Offenders Act is used;  isn't it the case that insurance companies ask for ANY previous offences whether covered by the ROOA or not..
I cannot see why insurance ompanies would not be bound by this law.
What do you think?

Ben Reeve-Lewis

20:39 PM, 1st January 2012
About 7 years ago

Yeah thats exactly it Paul, it isnt just about the ROOA. Remember Michelle Barber's case was wiped out because of a £150 fine for a simple overpayment of benefits and the Guardian journalists fake claims were turned down because they declared an (albeit fictitous) fine for littering.

Between you and me (and the 327,000 other subscribers to this site haha) I dont know if my daft leafletting fine from around 1990, which wasnt a joke, would invalidate my landlord's insurance if they needed to make a claim.

I was gobsmacked when I found this out. Its scandalous. Thats why ex offender organisations are campaigning against it

18:43 PM, 2nd January 2012
About 7 years ago

Surely the ABI must have a view on this.
The ramifications for landlords if what you say can stretch back decades is extremely worrying.
Certainly the tenants that you deal with tend possibly to come from shall we say 'dificult' backgrounds.
If such circumstances could possibly cause non-payout of insurance in cases of fire, flood etc; the landlords' business model could start to look tenuous to say the least.
I don't know of many landlords that have a mortgage and could afford to rebuild a property rented out to one of these 'difficult' tenants if the insurance criteria you have mentioned would be actioned; denying funds to rebuild the property, in the worst case scenatrio.
Do you know of ANY insurance company that would not have these ridiculous insurance requirements.
You have me very worried now.
I have had 4 floods in my flats and I do not recollect anyone asking for the status of the tenants.
Perhaps they forgot to ask!!?

9:13 AM, 5th January 2012
About 7 years ago

Hi Ben
How about a freeholder landlord? Would the buildings insurance be invalid if one of the flat leaseholders had a criminal conviction and caused a fire which destroyed the whole building?

Mark Reynolds

9:23 AM, 5th January 2012
About 7 years ago

Thanks for the article Ben

Having read Julie Fords article about this subject on this very website a few days ago, I decided to ring our referencing company and their stance is this.

Each and every case would be taken decided on its individual circumstances.

Mark Reynolds

9:32 AM, 5th January 2012
About 7 years ago

I'll try again! (Logged in before finishing the reply)

Thanks for the article Ben

Having read Julie Fords article on the same subject on this website a few days ago, I decided
to ring our referencing company and their stance is this.

Each and every case would be taken and decided on its individual circumstances. If the applicant has been convicted of an offence involving dishonesty then they are highly unlikely to be granted RGI or Landlords insurance. The referencing that we do, according to them, takes into account and checks for certain types of convictions (not sure how) and if revealed they fail referencing.

I agree that "ex-offenders" can be re-rehabilitated and given a second chance subject to their offending history. Can the subject of the application not submit a FOIA application and have their offending record provided to them for prospective landlords to inspect. Or sign a declaration with the LA who sets out what information they hold about them and what they will release to potential landlords?

That surely would go some way to showing that they really are re-rehabilitated and are trying to get their life back on track. That is of course unless they are an habitual leaflet dropper lol !!

Ben Reeve-Lewis

9:40 AM, 5th January 2012
About 7 years ago

Well in theory Donna yes but best to check with company. Are you the Donna Dyer who used to work for Lewisham?

Ben Reeve-Lewis

9:42 AM, 5th January 2012
About 7 years ago

Sounds ok when setting a  letting up but not a very useful response if you make a claim and the conviction comes to light I would think

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