A tenant who allegedly caused £128,000 of damage to a £1m rented property in Wiltshire is being pursued for damages by the landlady’s insurers.
The tenant who is a top scientist, Galina Govina, is locked in a “test case” High Court battle over the insurance bill, the outcome of which could be a real worry to “generation rent”.
Ms Govina rented the Wiltshire thatched cottage for £2,800 a month in 2010. She left the cottage empty when she went away for Christmas that year when a burst pipe flooded the property.
Following the incident the landlord’s insurers NFU Mutual paid the landlord out for the damage claim and then proceeded to pursue the tenant with a bill for £128,000 for the cost of the repairs.
The case revolves around whether Ms Govina left the heating on to prevent pipes freezing while she was away. There was a clause in her tenancy agreement, as there is in most of these, that provision must be made for heating the property at all times during cold weather. Ms Govina claims the heating was left on and that the incident was cause by a “mechanical failure” in the heating system.
The NFU Mutual claim otherwise and is pursuing her in this High Court test case for cost of the repairs.
Ms Govina’s argument is that the landlord’s insurance policy was there to protect her as well as her landlords from any financial consequences of accidental damage to the cottage. Govina’s barrister Andrew Butler warned that victory in this case for NFU Mutual would create a dangerous precedent affecting the rights of vast numbers of tenants.
Ms Govina, as reported by the Daily Mail, owns a £3m flat in Prince Consort Road, near the Albert Hall in Kensington, and was said to be “very surprised” when she later received a bill for £128,089.71 for the damage from her landlady’s insurance company.
Justin Davis, lawyer for NFU Mutual, pointed out in court that Ms Govina paid nothing towards her landlady’s insurance premiums. But Govina’s barrister insisted her share of the premiums was included in the rent she paid and this would have been less if the cover provided by the policy had given her no protection as a tenant.
The outcome of this case will be awaited by landlords and tenants with great interest.
In another insurance claim case reported in the Daily Telegraph, the insurers are refusing to pay out because the landlord did not regularly check on the state of the property and the wording of the policy clearly precluded liability.
This case involved a couple, Mr and Mrs Meryon, who lived in their £300,000 home in Ivybridge, Devon, for 36 years. In 2009 they took up a post as volunteers with a British Christian charity in Jerusalem, and let out their fully furnished home while they were away, to a local couple.
When the couple returned Richard Meryon who is a retired captain in the Royal Navy, with his wife Rosalind, found that their tenants had virtually “destroyed” the lovely home everything in it.
They were then faced with a five month battle to evict the couple costing them £2,500. When they eventually got their property back in May 2012 they were shocked to discover their insurer wouldn’t cover their losses of £56,000.
The policy originally sold to them by Saga was a standard home insurance policy rather than specialist landlord cover which did not cover for protection against damage by tenants.
After two months they reinsured the property with Saga, which had supplied their home insurance for around 10 years. Mr Meryon had phoned them to say the property was now tenanted and Saga sold him a home and contents policy underwritten by Allianz.
The tenancy had run smoothly for two years whilst they were away in Jerusalem until the breadwinner tenant husband lost his job. Although the couple had been receiving housing benefit from South Hams District Council they were not paying rent.
The Meryons had arranged an inspection of the property and flew back to the UK. When they arrived back they discovered that the tenants had boarded themselves in and would not allow them to enter. But they could see the signs from outside: the garden was strewn with their damaged furniture and rubbish.
They immediately warned their insurers that a claim was likely and arranged for an assessor to visit the property on the same day they gained access. The property was completely stripped of furniture and other fittings. There was extensive water damage to the walls, ceilings and floors caused by growing cannabis in the house, which caused severe condensation and damp problems.
The Meryon’s contacted the local police but were told it was a civil matter and not one they would deal with but to contact their insurers.
Allianz the underwriters subsequently refused to uphold the Meryons’ claim pointing to small print in the policy that said any loss or damage caused by persons lawfully in the home was not covered, nor was malicious damage by tenants.
In August 2013 a financial ombudsman adjudicator said it was clear that the policy did not cover malicious damage by tenants.
A Saga spokesman said the policy covered the property for tenanted use, but did not include cover for malicious damage or theft by people invited into the home and that the exclusions were clearly listed in the policy documents.
Saga has since offered a specialist landlords’ policy which covers malicious damage by tenants but the spokesman said in this case it wouldn’t have paid out either because the Meryons did not regularly check on the property throughout the tenancy.
“We completely understand the frustration that Mr Meryon felt coming back from Israel to find his tenants had vandalised his home,” he said. “But his policy simply didn’t cover him for this, as set out in the policy documents. The policy provided cover for one-off incidences such as fire, escape of water, subsidence, storm damage, flood, theft and damage following a break in.
“No Saga insurance would pay out in these circumstances. The lesson to be learned is that as a landlord you should visit your property at least a couple of times a year to check that your tenants and property are OK, which may nip events like this in the bud as the deterioration had been over some considerable period.”
Martin Bridges, technical services manager at the British Insurance Brokers’ Association, told the Daily Telegraph:
“If someone lets their property to tenants it is more appropriate to have specialist landlord cover, which is designed for this scenario,” he said. “Some specialist policies will cover owners for malicious damage to property or theft of furniture, fittings and fixtures.”
Landlords should not assume that their insurance policy will cover them for everything. Always read your policy carefully. Many landlords fail to get specialist landlord’s cover relying on standard household policies. This could be devastating and financial ruin to them if their tenant claims against them for accidents, which can run into hundreds of thousands of pounds.
For a complete list of specialist landlord insurers go here:
Landlord’s insurer pursues tenant for damages – https://t.co/wGKfZaHwL0
— LandlordZONE (@LandlordZONE) February 11, 2016