Upstairs refuse to claim on their insurance for damage?

by Readers Question

11:24 AM, 24th February 2020
About 3 months ago

Upstairs refuse to claim on their insurance for damage?

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Upstairs refuse to claim on their insurance for damage?

I own and rent out the downstairs of 2 leasehold flats located in Woodford Green, Essex. The owner of each flat insures their part of the building separately as per the conditions of the leases.

The water tank servicing the downstairs flat is located in the loft connected to the upstairs flat. It was recently established (? there are some doubts around this but for the purpose of this query I’ll use the word ‘established’) that a leak from this water tank caused damage to both the upstairs and downstairs flats.

As the repairs to my downstairs flat were minimal I chose to pay for these myself. The upstairs neighbours, however, are refusing to claim on their insurance to repair the damage upstairs, citing increased premiums and the excess payment as the reason. As my insurer will not pay for the damage to the upstairs flat, they have insisted that I pay the repair bill for upstairs out of my own pocket.

I myself am of the opinion that their insurance is there for such an unforeseen incident, particularly as we share the same roof to which my access is very limited indeed. Utilising my neighbours’ logic, by extension, were a faulty gas cooker in my downstairs property to cause a gas explosion which destroyed both flats, they would not consider themselves legally responsible to claim on their insurance for the rebuilding of their flat, but rather would expect me to pay for this out of my own pocket. This is obviously a very unsatisfactory state of affairs and not what I would imagine should happen in a real life scenario nor what the law or insurance industry would have intended.

In view of the above, if I refuse to pay for the damage to the upstairs flat and the upstairs neighbours took me to court as they are threatening to do, would they be likely to succeed, or would the court be likely to see my point of view, ie. that it would be standard market practice for them to claim on their insurers as their insurance in this case is there to protect against unforeseen incidents of which this is one. I hope (and imagine) that there would be some precedent in relation to this situation. (The neighbour claims to have spoken to his solicitor in this regard and is now claiming that I have been ‘negligent’. I have, however, absolutely no idea how I may have breached my duty of care as I have owned the property since 1990 with no issues with regard to the tank and have extremely limited access to it as it is located in my neighbours’ loft). I am also concerned of course, that if I did settle all of the neighbours’ bills there would be nothing to then stop them also claiming on their insurance for the damage, ie. ‘double dipping’

I am considering offering the neighbour a token amount to cover their excess and any increase in premium for the first year after the claim purely as a goodwill gesture but am not sure if this is wise as it could be construed as admission of liability.

Any advice would be very much appreciated.

Thanks,
Paul



Comments

terry sullivan

11:54 AM, 24th February 2020
About 3 months ago

is there a freeholder? is there a service agreement?

Jason McClean

12:00 PM, 24th February 2020
About 3 months ago

Hi Paul

In essence, you insure your own property and cannot insure their property as you have no insurable interest. They should be claiming on their own insurance for any loss.

If they wish to make a claim against your 'property owners liability', which should be bundled with your own insurance, then it needs to go through your insurer. They will then deal with the claim on your behalf.

You should refer your neighbour to your insurer to deal with all queries/enquiries.

It is at times like this that your insurance should earn its money and providing you are insured with a reputable company and correctly, the insurer will sort this out for you.

Ian Narbeth

13:05 PM, 24th February 2020
About 3 months ago

Paul
From what you describe the insurance arrangements you have are not uncommon but are not good practice.
We may not have the full story but the issue is primarily who has liability rather than who has insurance. If a problem with your water tank caused the damage then you may have liability. If the neighbours' insurers paid out they might in turn sue you by way of subrogation to recover what they had paid out. (Similar to car insurance where insurers pay out and then recoup from the at-fault driver (albeit he is indemnified by his insurers) so matters are dealt with insurer to insurer). However, given that the tank is not inside your property, the matter is complicated because the neighbour is insuring "his" slice of the property and you are insuring "your slice". Who insures the roof void?
Your insurance should cover you for liability to third parties, such as causing damage to their property.

Do not offer even a token amount as that may be construed as an admission of liability. Tell the neighbour that you do not admit liability and that if he wishes to claim he must either go through his insurance or sue you himself but in either case you will leave it to your insurers to deal with his claim.
Notify your insurers of a possible claim without delay.

Pauly

13:56 PM, 24th February 2020
About 3 months ago

Reply to the comment left by Jason McClean at 24/02/2020 - 12:00
Hello Jason and thanks for your reply.
I have had a look at the 'Property Owner's Liability' section within my insurance policy. Item A is worded as follows:

QUOTE

Item A of this Section indemnifies the Insured for BODILY INJURY by ACCIDENT OR DISEASE or DAMAGE TO PROPERTY happening during the period specified in the Schedule for which legal liability may attach: A) To the Insured as owner of the Buildings in respect of accidents happening at the Premises specified in the Schedule.

UNQUOTE

It would indeed appear that this should cover any damage to the upstairs property.
However, back in July when I was first notified that there was an issue I contacted my insurers who stated that ' damage to neighbouring properties would not be covered and they will need to go through their own insurers' . In view of this previous rejection, should I revert back to my insurers and refer them to the Property Owner's Liability section of the policy and await their comment or simply pass on my insurance information to the upstairs neighbours via my managing agents asking them to submit their claim for damages under this section of the policy?
I am also concerned now that I may have left it too late to appeal the original decision by my insurers not to settle this at the time.

Thanks,
Paul

Pauly

13:57 PM, 24th February 2020
About 3 months ago

Reply to the comment left by terry sullivan at 24/02/2020 - 11:54
Hi Terry and thanks for your reply.

There is indeed a freeholder but no service agreement so far as I am aware.

Thanks,
Paul

Kate Mellor

14:48 PM, 24th February 2020
About 3 months ago

I agree with Paul & Ian’s comments above. In addition, do you have legal expenses cover on your policy? If you do you should put them on notice of the threatened legal action over this situation.

Ian Narbeth

15:21 PM, 24th February 2020
About 3 months ago

Reply to the comment left by Pauly at 24/02/2020 - 13:57
Pauly
Depending on how much the claim is for, I suggest you see a solicitor. I don't think you are given us all the relevant facts. That is not intended as a criticism, just that these matters are complex.

If the failure of the tank was due to lack of maintenance that may alter the legal position. You mention a freeholder. Your solicitor will need to see what, if any, liability the freeholder has for the roof space and if the freeholder has any insurance.

Seething Landlord

15:42 PM, 24th February 2020
About 3 months ago

Reply to the comment left by Pauly at 24/02/2020 - 13:56Paul, your neighbours claim is against you, not against your insurers, who are correct in saying that the damage to the neighbour's property will not be covered under your policy. What should be covered under the liability section of your policy is your legal liability to your neighbour in respect of the damage which is a totally different matter. You have correctly notified your insurers of the potential claim and the fact that they misunderstood what you were asking should be sufficient to overcome any allegation of delay in notification. You need to read the policy conditions carefullyfully to make sure that you comply with them but normally the requirement would be that you tell them immediately of any claim against you and pass on any correspondence unanswered for them to deal with. Do not attempt to negotiate with your neighbour or make any admissions as this will almost certainly put you in breach of your policy conditions. Contact your insurers again, outline the situation, making it clear that your neighbour believes that you are legally liable to compensate him for the damage and ask them whether they will contact him or if not, how they wish you to respond to him.

Seething Landlord

15:52 PM, 24th February 2020
About 3 months ago

Paul, your neighbours claim is against you, not against your insurers, who are correct in saying that the damage to the neighbour's property will not be covered under your policy. What should be covered under the liability section of your policy is your legal liability to your neighbour in respect of the damage which is a totally different matter. You have correctly notified your insurers of the potential claim and the fact that they misunderstood what you were asking should be sufficient to overcome any allegation of delay in notification. You need to read the policy conditions carefully to make sure that you comply with them but normally the requirement would be that you tell them immediately of any claim against you and pass on any correspondence unanswered for them to deal with. Do not attempt to negotiate with your neighbour or make any admissions as this will almost certainly put you in breach of your policy conditions. Contact your insurers again, outline the situation, making it clear that your neighbour believes that you are legally liable to compensate him for the damage and ask them whether they will contact him or if not, how they wish you to respond to him. At the risk of repeating myself, you are not making a claim under your policy for damage to your neighbour's property, you are claiming to be indemnified in respect of your legal liability to him.

Darren Peters

16:06 PM, 24th February 2020
About 3 months ago

Reading between the lines I wonder if they don't want to go through insurance as the insurance company's assessor might "unestablish" the story and find another set of facts entirely.

Did you see the damage to their flat? Does it look like it was the water tank?

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