Insurer won't pay, may lose house.

One_Five_Four

Hello Folks,

This is my first post on the site and I apologise for the length of it, but my family are in need of some good advice, if anyone can help please.

In March 2011, my brother-in-law (BIL), who is self employed doing property repairs and home improvements, accidentally set fire to a bungalow whilst working on a flat roofed extension laying new felt with a torch (ie naked flame device).

He is absolutely not a 'cowboy', and has built up a very good reputation in his village over 20 or more years. He has always had proper public liability insurance. He had some buckets of water on the roof and tried to put the fire out with them, then got a hosepipe on it, but, in his words, he might as well have pee'd on it for all the good it did.

The fire brigade put it out, but the house was effectively destroyed, only the main walls and part of the roof remaining intact.

To cut a long story short, his insurers refused to pay out as he hadn't complied with all the conditions for the use of naked flames in his policy document. He took his claim, via very expensive solicitors, to the financial ombudsman, who finally last week ruled in favour of the insurers.

The house owners have had it rebuilt and are living there again, their insurers having paid for the work, but their insurers are now pursuing my BIL for £190,000 (not a typo) and, as he wasn't a limited company, he is likely to lose his own house. He is 57, married, and was winding down towards retirement.

The house was left unprotected and open to the elements for ten weeks after the fire, allowing the weather to further damage it. The insurers then used tradesmen from fifty miles away to repair it, rather than using cheaper local firms. All this time the owners (who have been wonderfully understanding incidentally) were living in rented accommodation.

The solicitors told my BIL in a letter a few weeks back that one of their partners had spoken to the ombudsman, who was 'looking favourably on his claim'. He has paid them thousands of pounds from his savings, apparently for no benefit.

I'm not looking for help to get that money back from the solicitors, and there seems little point in appealing against the ombudsman's decision, as my BIL clearly hadn't complied with the insurance conditions, but is there anything he can do to try to avoid losing the family home (jointly owned with his wife, worth perhaps £200,000) to pay this enormous debt?

Any other advice will be gratefully received, and I can post more details on here if you need them.

Incidentally, as a CIPHE Registered Plumber, I checked my own insurance policy 'for the use of naked flames away from my business premises' following the accident, and frankly, I'm not covered, and I doubt any other tradesman in this country is, either.

The conditions are so stringent that it is impossible to adhere to them in real-world situations. I'd suggest anyone employing somebody who will use a naked flame in their home bears this in mind in future.

Even though I'm a one-man-band self employed plumber, I changed to a limited company last September in case I'm as unlucky sometime. A very sorry state of affairs.

Thanks for your help.

dacouch

The restrictions for a flat roofer are not impossible to adhere to, they are generally a fire extinguisher to hand, do not a lit flame unattended and to inspect the area immediately after the work and then again 30 minutes later. There are extra precautions for a plumber eg covering any combustable items.

These are pretty sensible precautions that I would expect any plumber or flat roofer to use knowing the damage they can cause eg setting your roof and possibly whole house alight.

Insurers insist on these precautions as they greatly reduce the chances of a fire and if there is one it increases the chances of it being put out early.

It would probably be best to post on the MSE "Bancruptcy" thread as there are many experts who can advise you on there.

Voyager2002

What a horror story!

I suggest that you make a new and briefer post for the Bankruptcy forum: your BIL has a massive debt to an insurance company; the debt seems to be valid and legally enforceable; how can he protect the house that he jointly owns with his spouse (and presumably his pension fund)? I am sure that there are people who can provide helpful answers to that question, but such people are probably not on the Insurance branch.

Other aspects of the situation: the fact that professional liability insurance is invalid in a range of real-world situations is a serious issue for public policy. Your MP and your BIL's MP ought to be interested in this issue: it is not good that a whole range of small businesses are forced to operate without being properly insured, and that is not good for the consumer either.

You also mention that the insurance company negligently failed to complete the work in a way that would minimise the loss. They did have a legal liability to mitigate their losses, and so it would be possible to challenge part of the bill. That is a question for a solicitor, although the last thing your BIL needs is yet more legal bills! In his situation, I think I would ask a few solicitors what they think of the case, and whether they would be willing to fight it on a 'no win no fee' basis. If they agree then they genuinely think there is a good chance of winning.

Finally, if he thinks he paid his solicitors too much it is possible to have their fees examined: they call this "taxation" of legal fees. There is a fee for this, but it might save money in the long term.

dunstonh

He took his claim, via very expensive solicitors, to the financial ombudsman, who finally last week ruled in favour of the insurers.
<snip>
He has paid them thousands of pounds from his savings, apparently for no benefit.

The FOS is a free of charge complaints process. There would have been no need to use expensive solicitors to use a free of charge process.

The FOS themselves consider law and fairness. They do not expect the consumer to know the law and there have been suggestions in the past that indeed, it can do more damage than good to use solicitors as the FOS do not get the human consumer response and detail but a sterile legal opinion and the correspondence back and forth focuses on law and the fairness angle can be lost.

Incidentally, as a CIPHE Registered Plumber, I checked my own insurance policy 'for the use of naked flames away from my business premises' following the accident, and frankly, I'm not covered, and I doubt any other tradesman in this country is, either.

There is not a problem getting coverage. You just have to insure yourself for the business you operate. With high risk areas, that means checking that the policy does cover you for the work you do. Some insurers may not offer cover in that area, some may have hard requirements. Others will cover but maybe have sensible requirements. It is important to make sure insurance fits your needs and you dont buy the cheapest one you can get without checking the coverage first. That can be false economy (and you can see the impact of that now).

I fear the options in this case are going to be limited and as dacouch says, it it probably time to be planning for the worst and getting advice on that basis.

lisyloo

He is 57, married, and was winding down towards retirement.

The bad news is that it sounds like the debt is legal and enforceable.
He can certainly pursue them for not mitigiating their losses which might make it a bit smaller but is that going to be significant? Even if it was halved, it's stll a very big amount of money.

Who owns the personal house - is it in joint names with his wife?
Pension funds cannot just be emptied, there are rules/laws.
They will not be able to have his wife's half a house, she is not liable for her husbands debt - assuming it's in joint names.

He needs to get advice, but he does owe this money, so I can't see any immediate ways round it.

Very unfortunate story, which just goes to show the imporance of knowing the conditions.

vaio

dacouch wrote: »

The restrictions for a flat roofer are not impossible to adhere to, they are generally a fire extinguisher to hand, do not a lit flame unattended and to inspect the area immediately after the work and then again 30 minutes later........

OP, the conditions dacouch posted are pretty much what I remember too, were BIL's more onerous? and if so, what did he neglect to do?

One_Five_Four

Thanks to all of you for your replies.

Just to quickly cover my own insurance as a plumber, I'm a member of the CIPHE's own scheme (Chartered Institute of Plumbing and Heating Engineering - sorry I should have elaborated on that the first time), which as you can imagine, ought to mean it's the most suitable for my needs.

I've been in contact with them and they are supposed to be looking into whether it can be improved as there are twelve conditions I have to comply with to be covered for the use of heat, some of which are almost impossible in real-world situations.

My cover costs £306 per year, my BIL's over £500. He certainly didn't just go for the cheapest, but he's not a CIPHE member and we get it cheaper for being members..

I've been talking through what happened with my BIL today, and there are a few points that he made that might help, but the bottom line is he did have the fire and didn't comply with the conditions in his insurance.

The fire first became apparent a fair way away from where he was working, and spread into the main roof of the house so rapidly that he had almost no time to fight it. He didn't use his fire extinguisher as it contained 9 litres of water and he'd already used two 15 litre buckets on it to no avail. However his failure to use the extinguisher is one of the points the ombudsman has picked up on.

The house is in joint names.

I wondered if using solicitors was the best way to approach this. But it seems the fire assessor wanted him to sign a statement about the circumstances that he didn't agree with, and he said he could only do so after taking advice, which is where the solicitors came in.

Really, although it's very kind of you to offer advice regarding the circumstances of the accident, I think we are past the point of fighting the insurance company. What I'm hoping for is advice regarding how to keep the losses to a minimum, primarily not to lose the house.

Should I still try to summarise this and re-post it elsewhere?

Thanks again.

dunstonh

Pension funds cannot just be emptied, there are rules/laws.

I understand the law has recently changed on this. If you are aged 55-75, then they can force you to commence the pension and take the 25% tax free cash from you.

That is particularly harsh on a self employed person as the self employed get lower state pensions than the employed.

Just to quickly cover my own insurance as a plumber, I'm a member of the CIPHE's own scheme (Chartered Institute of Plumbing and Heating Engineering - sorry I should have elaborated on that the first time), which as you can imagine, ought to mean it's the most suitable for my needs.

Don't assume that the scheme is the best available. I have no experience or knowledge about that scheme but you often fund that plans retailed via trade bodies or professional bodies are not as good at what is available on the open market.

One_Five_Four

Thank you, that's most interesting. The Institute's scheme was designed by the Institute for its members, so I've tended not to shop around. I'll have another look when it's renewal time now though.

I don't know anything about his pension at all, but I'll tell him to bear it in mind if he has one.

We will have to get a breakdown of the insurer's claim to consider. He tells me the roofers working on the house (his friend lives opposite it) worked for just five hours, three days a week, and came from Norfolk. We're from the East Midlands. Hardly good value, and necessitating the owners living in a rented place for a lot longer than they might have.

lisyloo

If you are aged 55-75, then they can force you to commence the pension and take the 25% tax free cash from you.

Yes sure, what I was saying was that they couldn't just empty it 100%.
That doesn't mean he won't have to pay out of his pension income.

Hardly good value

We don't actually know that. They may have ben working nearby on another job, so the fact that they came from Norfolk may make no difference.
They do have a duty to mitigate losses, but it's possible this company gives the insurer a discount for "bulk" purchase and it's possible they were very good value.

and necessitating the owners living in a rented place for a lot longer than they might have

I understand the concerns, but you don't actually know it wasn't good value.
It's certainly something I'd want looked into and I would question all of it, but I don't think it changes the overall picture.
He is still going to owe a substantial amount of money.

Who owns their property would seem to be the most important question right now.
If he owns it outright and not his wife then that's worse than them owning it jointly.
Clearly his pension is inidividual. Any ISAs are individual (that's what the I stand for) but other assets may be in joint names.

vaio

lisyloo wrote: »

..........Clearly his pension is inidividual. Any ISAs are individual (that's what the I stand for) but other assets may be in joint names.

That's what my kid brother thought too but his soon to be ex wife's solicitor put him straight