Hope for victims of cladding scandal worried about insurance claims

Hope for victims of cladding scandal worried about insurance claims

02/08/2021

Fresh hope for victims of the cladding scandal as it emerges their insurance claims could be paid by the state

  • Insurance premiums have soared by £1.6billion for those living in unsafe homes
  • Those without buildings insurance risk their homes being repossessed 
  • Homeowners living in fire-trap flats could have insurance claims paid by state 

Homeowners stuck in fire-trap flats could see their insurance claims paid by the state in a bid to put a brake on spiralling bills.

Ministers are facing calls to step in to fix the market after the Daily Mail revealed that insurance premiums had soared by £1.6billion a year for those living in unsafe homes.

Insurance giants are also braced for a backlash after MPs demanded an investigation into firms that are increasing bills for cladding victims.

During a Commons debate on the cladding crisis last week, Tory MP Sir Peter Bottomley said insurers are putting premiums up by amounts which should be investigated by regulators ‘to see if they are fully justifiable’.

Hundreds of thousands of leaseholders face average bills of up to £40,000 each to fix fire safety defects identified in the wake of the Grenfell Tower fire

Premiums have risen by up to 1,600 per cent on apartment blocks wrapped in flammable cladding, while some have had their cover pulled completely.

Those without buildings insurance risk their homes being repossessed because they may be in breach of their mortgage terms.

Hundreds of thousands of leaseholders face average bills of up to £40,000 each to fix fire safety defects identified in the wake of the Grenfell Tower fire, which killed 72 in west London in 2017.

But they are already haemorrhaging £2.2billion a year in total on stop-gap safety measures and insurance. Homeowners say these costs are emptying their bank accounts before they are slapped with hefty repair bills.

The Mail is calling on ministers to end the cladding scandal within 18 months and spare leaseholders the crippling financial burden.

Insurers are considering emergency measures to help make cover affordable for homeowners, but experts say the only realistic solution is for the state to underwrite claims because insurers appear unwilling to take on the risk.

A source close to the housing ministry said: ‘Ministers are acutely aware of the insurance issue and are considering how best to support leaseholders.

‘Insurers have a role to play, but don’t be surprised to see the Government step in to support the market and perhaps stand behind major claims.’

Insurers say premiums will not return to normal levels until repairs are complete. But the Government has said it is not currently planning to step in to underwrite claims. Insurance expert Roger Flaxman said this has led to ‘a Mexican standoff’. He added: ‘One proposal is that the Government should take on the risk and enlist a large insurer to manage the process. But the Government is baulking at that because of the costs.’

Leaseholders in Birmingham and Sheffield have been unable to obtain comprehensive cover. West Midlands mayor Andy Street, who is backing the Mail’s campaign, said: ‘Many are facing eye-watering insurance premiums. Some now only have partial insurance. This is completely wrong.’

Laura Hughes, of the Association of British Insurers, said: ‘We are discussing with the Government possible short-term solutions which may help leaseholders, building owners and fire safety professionals.’

A Government spokesman said: ‘We are considering a range of options and no final decisions have been made.’

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