Landlord insurance and tenants on housing benefit

rachy32

Hi

I've just had a rather odd conversation with my insurer Direct Line, who have basically refused to provide me with landlords insurance this year because my tenant claims housing benefit. I asked why and they said that they never insure anyone on HB, and furthermore I must have completed the form wrong last year to get insurance with them, as it's the same tenant as last year.

When I challenged them on this, as I know it's not the case, they said that I must have wrongly answered the following question:
'Are your properties let to:housing associations, local authorities, students or asylum seekers'
I pointed out that I don't let to any of the above, and that the question doesn't even ask about housing benefit. The lady on the phone then told me that it did because it made them a housing association tenant! Having worked in housing for 8 years I knew this was rubbish, and when I got to speak to a manager he admitted that this wasn't the case, and also that the question doesn't ask about how the tenant pays their rent. He also admitted that the online quote form doesn't ask for any other information about the tenant and that I could have bought the product online without any inkling of any problem whatsoever.

The manager advised me that he would have to refer this matter to their underwriters for clarification as he admitted that what they were saying didn't tally with their questions.

Has anyone come across anything like this before? I am really concerned that if the insurer is saying that HB claimants are not covered, without even asking whether the tenant has HB, whether this is outright mis-selling.

Any thoughts gratefully received!

Rachy

HappyMJ

If the insurance covers the prompt payment of rent then not many insurers will cover that if tenant is on HB so it's a risk you take. However, tenants are no longer on HB they are now on LHA. Only housing assocation and council tenants still get HB. As a landlord you shouldn't really be aware that your tenant is claiming LHA as they get the money and pay the rent as normal. There is no permission or notification to the landlord when a tenant claims LHA. The tenant may have advised you that they are now claiming but that is just being nice they don't have to. If you have let to a tenant that requires LHA to pay the rent in the first place then as long as they met the income requirement of 30 times the monthly rent as annual income then they should have got the property anyway and pay rent from income and LHA helps them in other ways.

rachy32

Hi

I know it's known as LHA but actually because she's vulnerable, it is paid directly to me. That's not really my question though: it's how can an insurer say that they won't insure you if your tenant gets LHA / HB, when the question they ask doesn't actually mention this in the first place??

TSx

When you run through the quotation form online, you are asked to agree to the following statements:

Declaration
Neither You, nor Your Directors nor Your Business partners:
have ever had a proposal for insurance declined or special conditions imposed by any Insurer
have ever been convicted of or charged (but not yet tried) with a breach of any health and safety legislation or any other criminal offence other than parking or speeding offences or offences which are spent under the Rehabilitation of Offenders Act 1974.
are subject to an outstanding County Court Judgement (or the Scottish equivalent)
are subject to bankruptcy or insolvency orders which are either outstanding or have been discharged for less than 5 years
Your business/ You:
comply with all of your legal obligations as a landlord
do not have agreed letting periods of less than 6 months
IMPORTANT STATEMENTS ABOUT YOUR PROPERTY (IES)
Your properties:
are built solely of brick, stone, or concrete and roofed solely of slates, tiles, asphalt, concrete, metal or other incombustible materials other than flat roofs
are maintained in a good state of repair
are not Grade 1 Listed
are not used as holiday homes
are not sub-let
do not require registration under any Local Authority Requirements
Your properties are not occupied as or let to:
half way houses
bedsits
housing associations
Local Authorities
students
asylum seekers
IMPORTANT STATEMENTS ABOUT YOUR TENANTS
Only those individuals who have signed the tenancy agreement with you shall permanently reside at the property unless they are:
members of the same family
the partner of the tenant
individuals under the age of 18 for whom the tenant is the legal guardian
At least one of the individuals who have signed the tenancy agreement must be either employed, retired or in receipt of a disability benefit at the point of signing the tenancy agreement
Please ensure that the information provided by you and the statements on this page are correct. Should you decide to buy this policy, these details will form the basis of the insurance contract between us. Incorrect information could invalidate all or part of the policy. Under European law you and we may choose which law will apply to this contract. English law will apply unless both parties agree otherwise. Our cancellation and complaints procedure is detailed in the policy documents, where you can also find the details of the 14 day cooling off period.
If your circumstances change between the date you purchase the policy and the date when you require the policy to commence, please call us. Incorrect information could invalidate all or part of the policy.
Mid term adjustments to your policy will result in a maximum amendment fee of £21.20 (including Insurance Premium Tax where applicable) in addition to any premium charged or refunded.
If you decide to cancel your policy during the period of insurance a cancellation fee will apply amounting to 1/12th of your annual premium, up to a maximum of £50.00 (calculated at the time of cancellation, plus Insurance Premium Tax where applicable).

So providing they are either working, retired or on disability benefits, direct line can't really decide they mean something different (retrospectively, going forward, they can make whatever conditions they like)

rachy32

Thanks very much for that- that means I was covered so that makes me feel an awful lot better!

Seems like they need to make sure their staff are giving out the right info over the phone : )

dacouch

What might help explain it is, a lot of Insurers are happy to offer cover to people on housing benefit providing the landlord has a tenancy contract with the tenant eg they don't like tenancies between the Landlord and directly with a council or housing association.

The former tends to have longer term tenants who tend to take care of the properties, the latter tend to have frequent changes of tenants (Often high risk) who as they are only in the property for a short time cause claims.

That is how a lot of Insurers deal with HB.

As TSX has mentioned DL currently (Not sure if it applied last year or not) are basically trying to avoid covering lets where if it's an individual they are not employed etc or if it's a couple (Assuming they both signed the tenancy agreement) that at least one of them must be employed etc