This week we have feedback on declaration of previous losses and on last week's MOT test answers. Also Waltham Pitglow advises new landlords on buy-to-let insurance

We asked a question in the CPD of 27 March about the disclosure of a major loss falling outside the loss period stipulated by the insurer in the any other matters (declaration) section of the proposal rather than claim details.

Good response on this and most agreed that it was material and should have been disclosed - irrespective of the period of losses requested - as it was effectively the same business under another name.

However, one could pick out the expert witnesses a mile away (they have minds honed to look for a range of possibilities).

The general view was that irrespective of where it was disclosed on the proposal the underwriter should have noticed it.

The experts and, indeed, those used to the London Market came up with the other alternative that, in the rush of the market, the underwriter may have been shown or just asked to see the claims details page. In this case, the underwriter could be justified as the broker has withheld information.

Risk confirmation
A thorny subject, but it does pay to stop and think about a situation and not jump to conclusions. And does this affect the broker at the coalface who is dealing with the client?

Yes of course it can do if there is a claim. Perhaps a copy of proposal forms should be attached to confirmations of risk and or policies from insurers to make sure that there is a clear consensus on information given and received between the two main contracting parties. Or is that just more paperwork and effort?

Nowadays, more and more landlords are being created as the trend towards buy-to-let continues. With interest rates continue to fall, mortgages become subsequently easier to afford and pension prospects are looking increasingly bleak, individuals are opting to acquire second properties as a means of securing their future.

Here, Justin Jacobs at Norwich Union takes a look at the area of fixtures and fittings insurance - where the lines often blur between buildings and contents policies - and how brokers should be advising residential property owners and landlords on suitable insurance cover.

The whole category of fixtures and fittings in residential property is a grey area that is difficult to define. Floor coverings, for example, often count as part of the fixtures and fittings, and may therefore be covered by buildings insurance. Non-fitted carpets and rugs, however would probably fall under a contents policy.

While there is no firm rule, anything that would normally be left behind when moving house would be considered as fixtures and fittings.

New and inexperienced landlords must take their insurance needs very seriously. Brokers should take care to advise their clients on a whole range of insurance needs relevant to buy-to-let properties.

First and foremost, the contract of lease should clearly define who is responsible for insuring what, since a landlord's insurance needs depend on the degree to which a tenant is responsible for his or her own insurance.

If a full repairing lease is issued, then the tenant will be responsible for repairs to the building. More usually, however, the landlord takes responsibility for buildings insurance and the tenant is responsible for contents.

From the outset, brokers must ascertain whether the sum insured is adequate to meet the requirements. The broker should also check whether accidental damage cover is required in addition to standard cover - often a good idea in a let property.

Also worth noting is that a block of flats may have an insurance scheme that its residents can join.

If a flat is let as furnished, landlords should complete a full inventory of all items of furniture included to avoid theft or potential confusion once the tenant moves out. An unfurnished let, however, may still need contents cover for communal areas and also for those items that might commonly fall into the grey areas and be left in situ (curtains and rugs perhaps).

In addition to buildings and contents cover, brokers should ensure landlords are aware of the following - and all-too-frequently overlooked - areas of insurance:

  • Property owner's liability cover

  • Loss of rent in case the property should become uninhabitable due to an insured risk, for example fire damage

  • Employers' liability, if, for example, a cleaner or gardener is employed by the landlord

  • Engineering cover if the property contains a lift - and the property owner is also obliged to ensure its maintenance

  • Legal expenses

  • Directors' and officers' cover for the directors of the residents association in a block of flats.

    Remember that ultimately, the customer is at risk if they have not been given sufficient information to make an informed decision and you would be surprised how often customers will claim that they were not informed when a problem arises.

    MOT feedback
    Thanks for all the feedback on this month's MOT test. Here are a some points that several people have raised.

    Q20. Mr Jones' company would have to be a limited liability company for there to be a legal requirement for EL cover for he and his wife.

    Q3. If the broker was acting under a binding authority then acting as an agent of the underwriter there would be a nasty conflict for the broker in that anything the broker is told about the risk is effectively told to the underwriter anyway. Does this mean that brokers should clarify the agency situation to an insured every time they use a binder? Thoughts on that one please.

    Q9. Many interesting comments about mis-declaring the main driver on a motor insurance proposal (fronting).

    Apparently this is a major problem for brokers writing private motor insurance and we would be grateful to hear from insurers who would like to write a short article on this, particularly outlining any methods they can recommend to limit the practice and from their own experiences any tips on how to spot it.

    Using this CPD page
    For the vast majority of practitioners and indeed support and supervisory staff in our industry, CPD is about regular learning and study that is planned, recorded, timed and evaluated.

    If you are a member of a professional body with a CPD requirement then there will be certain rules regarding the quality and nature of study material, and the way in which it is recorded.

    For staff of GISC members this means recording on your individual training file what the learning was, who provided it and when.

    It might be structured, such as a course, a learning programme or exam study. But it can be unstructured. This form of study encompasses reading the trade press, technical material or taking part in activities to support your professional body.

    Some CPD requirements are points related (a little antiquated) and others require a time value to be allocated.

    For example, it might take one hour to read Insurance Times each week. Most of that could be put as a time value but, in reality, perhaps only an half hour was devoted to learning something. The rule is to be honest with yourself and record the time that is relevant.

    Always take time to make a note of what you felt you gained from the activity. This is useful information for anyone else considering the same activity.

    In response to the popularity of our CPD programme each week's CPD page can now be downloaded from our website. We will be preparing a binder for you to keep these in alongside the results of the exercises.

  • This page is edited by RW Associates, specialists in training, compliance and competence.


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