Home insurers are using their small print to stem the flood of winter claims

Scottish homeowners are being urged to check their insurance and improve their winter defences after floods last month cost Scotland an estimated £20 million.

More damage to homes was caused last weekend by what the Scottish government called a “perfect storm” affecting areas of the east coast from North Berwick up to the Shetlands.

The latest floods highlighted the potentially ruinous consequences for homeowners of any failure to extend an agreement between insurers and the government that guarantees every property in the UK can access affordable insurance (see side story for more on this).

With the Met Office’s winter outlook pointing to a particularly chilly festive season, the chances are that more homeowners will be digging out their insurance contracts over the coming weeks.

For some, that could be the start of a whole new set of problems as it is only when you come to claim that you find out if your home insurance does not have the necessary cover – and in a growing number of cases, it does not.

As margins get tighter, insurers are challenging more claims than ever. The rise of comparison websites means they’re often in luck, with consumers failing to look past price when buying their policy.

It doesn’t take much damage to trigger a claim for home insurance. The big chill of two winters ago caused a huge spike in the number of claims related to burst pipes, many of which became complaints as insurers stalled on paying out.

Around half of the complaints made to the Financial Ombudsman Service (Fos) concerning buildings insurance involve some form of winter water damage. Those complaints are on the rise, reflecting a combination of successive harsh winters and stubborn insurers.

There were 4,556 new complaints about buildings insurance in the year to April 2012, up from 3,469 the previous year, according to the Fos.

In Scotland the number of buildings insurance complaints this year reached 504 by the end of November, compared with 487 for the whole of 2011. The level of complaints about contents insurance is far lower and is virtually unchanged. A spokesman for the Fos said: “We regularly hear from people who have made a claim on their home insurance only to discover that they aren’t covered for everything they thought they would be. It may not always be obvious what your insurance will pay out for, so ask your insurer if you are not certain.

“If you don’t think you’ve been treated fairly, the ombudsman may be able to help.”

Many complaints to the Fos concern the time it has taken for the repairs arranged by the insurer to be completed, while the standard of those repairs is also a common grievance.

(For more on how insurers treat flooding claims, go to: www.financial-ombudsman.org.uk/publications/technical_notes/flooding.html).

If you take a buildings insurance complaint to the Fos you have an evens chance of the service finding in your favour, based on current trends.

So what reasons are insurers giving for rejecting claims? Some dispute that the damage was caused by a storm or flood, in a bid to instead blame the policyholder for failing to prevent damage caused by wear and tear or poor maintenance.

Insurers say they are increasingly receiving claims from places with no history of flooding, especially where there has been heavy rain and drains and channels that previously coped have been overwhelmed.

Ian Crowder, a spokesman for AA Insurance, said: “Often that happens where there has been development.

“We have stories of homes that have never been flooded, then a new development goes up and suddenly the dynamics of the way that water drains changes and there is an impact on existing properties.”

One way to avoid becoming embroiled in a dispute with your insurer is to fully understand the policy you take out.

Most people now buy their insurance online through comparison websites, but this has had the effect of placing the emphasis on price at the expense of the actual cover being provided.

The result can be that damage related to water pipes and boilers is not included in the policy, for example.

However claims for burst pipes rose by around 80 per cent in winter 2009, according to AA Insurance. Many cheap policies also exclude outside buildings (such as garages and sheds), accidental damage and legal expenses. Look too at the amount of cover provided, as this can vary significantly between policy.

Insurance hassles can also be avoided by taking preventative action around the home.

The cause of much of the damage that results in claims – burst pipes – can certainly be tackled easily. The Association of British Insurers recommends leaving your heating on at least 12C to prevent the water in your pipes from freezing (particularly relevant if you’re away over the festive season).

You can also make sure your water pipes and loft are properly insulated and check the lagging on your cold water tank, repair any leaky taps and radiators, and seal any holes that let cold air in. Helene Brown, regional director of insurer Central Bespoke said: “Most insurers issue winter tip factsheets with sensible suggestions such as lagging pipes, leaving heating on at low when the property is empty and so on,” she said.

“Properties are more likely to be unoccupied over the festive period therefore it is always wise to make sure in advance that your insurance policy will fully cover escape of water and other weather-related incidents, as some policies will have excesses and unoccupancy warranties.”

• For more information: Find out whether your home is considered a flood risk by visiting the Scottish Environment Protection Agency website at www.sepa.org.uk