I am delighted to introduce another insightful post from housing consultant and former TRO, Ben Reeve-Lewis, this time on worrying aspects of insurance (which I touched on also last year in a previous post on insurance for lodgers).
Criminal convictions and insurance
I have recently become aware of quite an alarming development in private renting. It is to do with insurance policies in relation to criminal convictions of residential occupiers.
A friend of mine pointed me in this direction, she is the procurement officer for a local authority responsible for bringing in private lettings as a discharge of housing duties for people applying for homelessness assistance.
All sensible landlords should take out insurance but in many cases their insurance policy is invalidated when the occupier has an unspent criminal conviction within the past 5 years. This applies to not only tenants but owner occupiers too.
The situation is highlighted in the frightening case of poor Michelle Barber. Her estranged husband Gary Hooley burnt down her home and was jailed for 4 years for arson. Ms Barber understandably claimed on her insurance a sum of £241,000 because the house had been razed.
Insurers Aviva (formerly Norwich Union) paid out but 2 weeks before she was due to move back into her home, insurance investigators found out that she had, just a few years prior to taking out the policy, been fined £150 for an overpayment of housing benefit. Aviva duly voided the policy as a result and are claiming the money back off of her for failing to disclose a previous conviction.
They stated that had she disclosed the fine they would not have offered her a policy. This is apparently common practice in the world of insurance and apart from general motoring offences many insurance policies are invalidated if an occupier fails to declare an unspent conviction however trivial.
Journalists for the ‘Cash’ column of the Observer newspaper contacted Norwich Union and Direct line insurance asking for cover and declaring an imaginary £100 fine from 2 years ago for dropping litter to see if they could get cover. Both companies declined to offer insurance.
Now this is bad enough when it comes to the policies of owner occupiers but it also effects the tenants of landlords. If a tenant has an unspent criminal conviction then this can void the landlords insurance. This is the case even if the tenant doesn’t tell the landlord about it, which understandably many tenants would not feel was any of the landlord’s business.
Another friend of mine is the procurement officer for another local authority and has been set the task of finding landlords willing to let accommodation to ex offenders. She has to wrestle with the idea that the offence could seriously effect the landlords insurance against the prospective tenant’s right to privacy and her own duties under the Data Protection Act.
I can understand landlords not wanting an ex offender in their property in case it invalidated their insurance but does this then mean that ex offenders will not be able to ever rent accommodation?
Approximately 7.3 million people in the UK has a conviction or caution behind them. Insurance is always underwritten against certain risk factors and if, to use Michelle Barber’s unfortunate case, a residential occupier has a previous conviction for setting fire to their own home and then subsequently did it again I would think that most people would understand the company’s problem but how can it be possible or even sane to invalidate a person’s insurance for failing to declare a housing benefit fine?
Housing benefit overpayment = likelihood of arson by someone else? Where is Franz Kafka when you need him!
This effectively leaves the best part of 7.3 million people without insurance cover, not because of government legislation but because of insurance companies looking to get out of paying on a policy in any way they can. And I invite comments from anyone in insurance to justify the logic of these blanket policies on trivial unspent convictions.
- A mother has an old conviction for shoplifting from 4 years ago whilst suffering from post-natal depression
- A working accountant has a previous conviction when as student they were convicted of urinating in a public place during student rag week.
- A banker has a conviction for dropping litter in public….
come on. How does any of these possible scenarios make a person more of a risk to insure in residential accommodation?
If every single insurer indulged in this blatant rip-off there might be a case to defend, if only by numbers alone but there are insurers who don’t penalise their customers for minor historic infractions of the law:
- Insurable: 0845 0779949 | www.insurable.com
- Fresh Start Insurance: 01733 208278, | http://www.freshstartfinance.com/Buildings-and-contents-insurance
- Anchor Underwriting: 020 3301 3393 | email: firstname.lastname@example.org
- Guildhall Brokers: 020 8446 6307 | www.guildhallbrokers.com
- Fairplay Insurance: 01424 222082 | www.fairplayhelp.com
If these companies can set up policies that don’t penalise 7.3 million people why cant Aviva or Direct line?
The Rehabilitation of Offenders Act 1974 sets a time period based on the sentence given that offences must be declared to employers and insurers. Depending on the nature of the offence the time period can be either 6 months or forever.
The legislation is one thing but do ex offenders even know that a trivial conviction needs to be declared to their landlord?
Ex offenders charity ‘Unlock’ is mounting a campaign against the blanket policies of insurers not to offer cover to people with convictions. Luckily the government has plans afoot to deal with this problem. The Law commission has a consultation paper out inviting comments by the 24th June 2010. Hopefully a new law will eradicate this insane practice once and for all.
About Ben Reeve-Lewis: Ben was the Tenancy Relations Officer for Lewisham Council for 11 years, prosecuting landlords for harassment and illegal eviction. Now he is a freelance housing law training consultant with a more balanced approach, delivering housing law courses for the Chartered Institute Of Housing, Shelter etc. His aim now is to help the housing world work as a interdependent system that benefits all