Insurance Review: Plug the leaks in home insurance

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Brokers have a responsibility to invest time in educating their clients about ‘trace and access cover’ in the event of leaks

After an unseasonably warm December, more recently many people will have been turning their central heating back on. Some of them, however, will have found their water pipes deteriorated since last winter and may have to deal with damage caused by a leak.

While most home insurance policies do cover damages from leaks (commonly known as ‘escape of water’ in the policy terms), a significant number do not include ‘trace and access’ cover. This can result in unexpected costs for the homeowner.

Without trace and access cover, any damage done to the home to locate the leak is not covered, such as removing a wall, ceiling or floorboards, or breaking through a concrete floor to access plumbing or gas pipes. This means the homeowner will be asked to foot the bill for this often expensive and disruptive process.

Distress all around

If you have ever experienced a leak in your home, you will know how stressful it can be to deal with. The point of claim is also usually the time when the customer discovers the policy does not include trace and access cover. For a broker, it is no easy task to inform a distressed homeowner that the cost of locating and accessing the problem may not be covered.

With escape of water being one of the most commonly claimed-on aspects of a home insurance policy, trace and access cover should be regarded as a ‘must have’ rather than a ‘nice to have’. Yet some providers exclude it from their products in order to reduce the premium. Customers lacking the advice of a broker will see a cheaper product and many will purchase it without realising they are signing up to limited cover.

Brokers have a responsibility to invest time in educating their clients about trace and access cover, and to review their home insurance policies each year to ensure they are properly covered for all potential risks.

Industry impact

And while the damage associated with not ensuring such cover is in place is extremely risky for individual policyholders, the wider implications for the insurance industry as a whole are equally concerning. As everyone in our market knows, there is an ongoing challenge with the public’s perception of claims.

The true value of an insurance policy is not realised until a claim is made. So when a claim is denied based on the opaque terms of a contract, it is difficult to argue with the inevitable anger that will be directed towards the broker or insurer when policy exclusions have not been made clear.

Trace and access serves as a timely reminder to brokers of the importance of managing customer expectations.

It also demonstrates just one of the reasons why the value of an adviser must not be under-estimated in ensuring customers have the right home insurance policy in place.

Hannah Tasker is general insurance manager at First Complete and Pink