When an insurance company agrees to insure your home under a home insurance policy, the policy document is evidence of that contract. it details the cover provided by the policy and may include warranties but what is a warranty under a household insurance policy and what is the effect of breaching a policy warranty?
What is a home insurance policy warranty?
In essence a warranty is the strongest form of condition that can be applied to a contract and in legal terms if the terms of a policy warranty are not complied with then the contract, the policy, can be avoided by the insurance company, although in practice this is not generally the case under a household insurance policy.
What sort of warranties appear on a home insurance policy?
A warranty may form part of the insurers standard policy wording, but it also may be added to the policy on a bespoke basis as a result of certain features of the risk proposed to the insurance company. A policy warranty is often used to enforce compliance with a particular set of circumstances that the policyholder has agreed with the insurance company will exist at the property.
Probably the most common policy warranty on home insurance polices is the inclusion of an intruder alarm warranty. This will state that the intruder alarm, that the policyholder has informed the insurance company is present and operational, will be set whenever the property is unoccupied.
What happens if I breach a warranty on a home insurance policy?
As stated earlier the legal position is that the insurance company could avoid the policy completely, however the Financial Conduct Authority (FCA), that authorises and regulates all insurance companies providing home insurance in the UK, states that an insurer must not repudiate, turn down, a claim as a result of a breach of a policy warranty if that breach if the circumstances of the claim are unconnected to a breach. This rule applies to customers designated as “consumers” only in essence someone acting in a private capacity and not a business.
An example of this would be, in general terms, where a property was damaged by a storm whilst the property was unoccupied, if there was an intruder alarm warranty on the policy and the alarm was not set the claim could be avoided by the insurer but the FCA rule would disallow this and the insurer would meet the claim.
What if I cannot comply with a policy warranty on a household insurance policy?
You should always read your household insurance policy carefully. If there are terms and conditions on the policy, including warranties that you cannot comply with you must contact your insurance company or broker immediately as you risk being uninsured. If you have any queries or further questions regarding policy warranties or your home insurance in general please contact us directly to discuss your concerns or requirements.