Subsidence-Continuation of Cover for Flats: Their own Company has a Commercial Policy

Annemos

Note that each FOS case only applies in this instance and is not to be taken as precedence. 

Three  FOS cases I have come across involving Commercial Insurance Policies and Subsidence Claims for flats. 

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This is a recent 2024 case where  a Limited Company O has been set up to own the Freehold of the 4 flats. O had a Commercial Policy with Aviva. But it seems to me, that this Ombudsman has looked through the Commercial Policy issue and is treating this as relating to Domestic Homeowners (the leaseholders). So Continuation of Cover should apply. 

https://www.financial-ombudsman.org.uk/decision/DRN-4787805.pdf


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In contrast, this was an older 2015 case. But the result was the opposite. This was Hiscox.

In this one, the Ombudsman did NOT look through that this was a Commercial Policy for the Domestic Homeowners. So Continuation of Cover was denied. (For some reason, this Case seems to be taking a different position to the previous case.)     

Here the ownership of the Freehold had changed hands from  Z to L. It was Z who had the Subsidence Claim.  Is that change of ownership the real problem here which is putting a spanner in the works? (At the end one can see that the Adjudicator had wanted to be more on the flat-owner's side!)

https://www.financial-ombudsman.org.uk/decision/DRN6135233.pdf


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Finally this case is one where the whole block of flats was under a Commercial Policy with RSA taken out by S. They also won this 2016 case because they are deemed to be Domestic Flats even though Company S was set up as a Management Company. (Who could be owning the Freeholds here?)

https://www.financial-ombudsman.org.uk/decision/DRN2337317.pdf

DullGreyGuy

Annemos said:

Note that each FOS case only applies in this instance and is not to be taken as precedence. 

Three  FOS cases I have come across involving Commercial Insurance Policies and Subsidence Claims for flats. 

Not sure what your actual question is? Seems more like random musings on your Mastermind topic. 

The upheld cases are both where a non-commercial entity that is owned by the small number of leaseholders had a policy, claimed subsidence on a policy and then the insurer didnt want to renew saying its a Commercial Property policy so the ABI agreement doesn't apply. The ombudsman effectively said its a quirk that its classed as Commercial Property and really its a Domestic policy so the ABI agreement does apply.

The Not Upheld case is materially different, A commercial entity owned the property at the time the subsidence claim was made. The property was then bought by the residents and a non-commercial entity they formed to hold the freehold. 

Hiscox has not said they won't continue subsidence insurance and dont have to follow the ABI scheme because its commercial, like the other two insurer, but say that they Commercial Insurance can only be bought by For Profit companies and that is the basis for refusing not the subsidence. The claim was made by a for profit company, the original freeholder, and so the ABI agreement doesn't apply were another for profit company buy the freehold again. 

Annemos

Some people do searches on here when they have had Subsidence. I am adding the above so it will come up in a Search.

There is a lot of information these days on Subsidence for regular homes. But not much at all about flats. 

I am also particularly following Cases on Continuation of Cover. Many of us have this potential problem on the horizon. 


Thank you. That is what I was after. I had not considered the Profit Motive.