Many insurance policies for residential and commercial properties provide cover for loss or damage caused by flooding. We hear from customers who’ve complained to their insurer following a claim for flood damage, because they’re unhappy their claim has not been paid, or they feel their claim has not been handled fairly.
Types of complaints we see
Some of the complaints we see include:
- a disagreement a flood took place
- a disagreement the damage being claimed for was caused by flooding
- repairs done to a property aren't good enough, or haven't put the property back to its original state
- the repairs being asked for are preventative and not covered by the policy
- a dispute about whether the repairs to a property will be 'lasting and effective'
- flood damage being discovered long after flooding, usually during renovations
- payments for alternate accommodation have stopped, but the consumer isn't able to move back into the property
- the consumer isn't able to live in the property but their claim for alternative accommodation has been rejected
- the consumer not being happy with the alternate accommodation provided for a variety of reasons
Gradual flooding in properties
We also see cases where a consumer has noticed that a basement or ground floor room, which was previously watertight, has started to let water in.
There are many reasons why water might start to build up in a basement or the lower floors of a property. Flooding isn't always sudden, we also consider complaints where flooding has occurred because of:
- a leak from the insured property or a neighbouring property
- a rise in the water table
- damage to drains or underground pipes below the property
- an underground stream
- failure of tanking in the property
Handling a complaint like this
When you receive a complaint involving flooding, you should reply to your customer within eight weeks. We only look at complaint that you've had a chance to look at first, so that you have the chance to put things right. If a consumer complains, and you don't respond to them within the relevant time limits or they're not happy with your decision, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly and that you have reflected carefully on the circumstances.
Find out more about how to resolve a complaint.
What we look at
Defining a flood
Some insurance policies don't define "a flood" in their policy. If no definition is given, then it's likely we'll need to decide whether a flood occurred.
Floods often happen suddenly, particularly when caused by a natural event such as a river bursting its banks or during heavy rainfall. But that's not the only situation in which flooding can occur.
We usually follow the approach that a flood doesn't have to be a sudden or violent event. It can occur when water enters (or builds up) in a property slowly and steadily, and this doesn't necessarily have to be caused by a natural event. The key factor is that water had built up, regardless of where the water came from.
Flood damage can also be caused by flooding outside the property. For example, if the property is surrounded by floodwater which leads to the walls becoming damp, we're likely to say that consumer has a valid flood claim, if the damp has caused damage to the property.
Similarly, we might say that damage has been caused by flood even if the water itself hasn't damaged the property. For example, if floodwater washes away enough earth to make a building unstable, we're likely to say that damage to the building was caused by the flood.
Where damage is caused by a build-up of water which has escaped from a pipe or domestic appliance, there may also be cover under the "escape of water" section of the policy.
Tanking is a heavy-duty form of waterproofing that’s often used in buildings with rooms below the ground or in areas with a high water table. We sometimes see cases where a previously watertight basement room has started to let water in.
If there’s evidence the customer should have known their tanking was defective or missing before a flood happened, we may say it was reasonable for you to reject the claim.
Insurers sometimes say the tanking failed because of a "gradually operating cause" which is excluded under the terms of the policy. We’re unlikely to agree that it's fair for you to exclude the claim on this basis, if the damage which occurred is the result of a steady accumulation of water as opposed to the gradual deterioration of the tanking. In these cases, we generally say the cause of the damage was flooding, not the failure of the tanking.
Find out more about our approach to complaints concerning gradual damage.
Effective and lasting repairs
The intention of an insurance policy is to put the consumer back in the position they were in, before the insured loss occurred. So we wouldn't usually expect an insurer to add preventative flood damage measures which the consumer didn't have previously.
However, we also say that any repairs the insurer carries out should be effective and lasting. So if there is a significant risk that the property will flood again through the same means if preventative measures are not put in place, we might say that a repair without those preventative measures wouldn't be effective and lasting. This is because there would be no point in completing repair work which would require redoing after a short period of time, or on a regular basis.
So there are occasions where we might ask the insurer to do more than just repair the insured damage, if this is necessary to ensure a fair outcome for the consumer.
For example, we may sometimes say the insurer should install tanking where there wasn't any before if it's clear that any repair carried out would only be temporary, and likely to fail in the short term, if tanking isn't installed. This sometimes happen if we are satisfied that an "un-tanked" room was watertight before, but it's flooded due to a rise in the water table.
Allowances for alternative accommodation
When a consumer makes a claim for flood damage, it may be necessary for them to move out of their property while the repair works are carried out. The property they live in might be uninhabitable because it isn't safe, or there may not be access to essential amenities.
Most buildings insurance policies provide cover for alternative accommodation. The purpose of this is to pay for the reasonable additional cost of temporarily rehousing the policyholder and members of their household if their home becomes uninhabitable.
We would generally consider a property uninhabitable if there is no kitchen, bathroom or toilet facilities, or if it's unsafe to be lived in. We'll look at the circumstances of the claim on a case-by-case basis and decide if we think it's fair and reasonable for the consumer to live in that property. Even if washing and cooking facilities are available, it still might be unsuitable for the consumer for other reasons, for example, if they have young children or specific medical conditions.
We would expect an insurer to carefully consider the needs of someone who is vulnerable, or in the context of the Covid-19 pandemic, someone who is shielding – which may mean a property is uninhabitable for that person, whilst works are carried out. The FCA has issued guidance for financial businesses during the pandemic.
It simply being inconvenient to live in the property doesn't usually mean that it's uninhabitable. Also, for buy-to-let policies, damage making the property unattractive to prospective or existing tenants doesn't necessarily make it uninhabitable.
Generally, we would expect the cost of alternative accommodation to be covered until the policyholder's property becomes habitable or safe again, subject to the limits specified in the policy. This might happen part-way through the repairs.
If alternative accommodation is only needed for a few days or weeks, staying in a B&B or hotel may be reasonable. But if it is required for a longer period, it may be better to rehouse the consumer in private rental accommodation or serviced apartment.
Sometimes, for various reasons, rental properties may be limited in the consumer's area. In these situations, we would expect the insurer to work with the consumer to find a reasonable solution or compromise.
In a claim for for alternative accommodation, we'd expect you to show that you've taken the following into consideration:
- distance from family and friends
- number of bedrooms
- distance from work and schools
- pet friendly properties if the consumer has pets
- any disabilities or medical conditions
Allowances for disturbance
Unlike the costs for alternative accommodation, other costs aren't usually specifically covered in most home insurance policies. So we'll look carefully at claims for other costs to see what's fair and reasonable.
For example, a consumer might spend more money on food because they've been placed in a hotel or B&B that doesn't have food storage or cooking facilities. So whilst acknowledging that such costs aren't technically covered under the insurance contract, we might think it's fair and generally good practice for an insurer to cover the reasonable additional costs a consumer has incurred by needing to eat out.
Typically, we might say reasonable additional expenses include:
- extra food expenses – having to buy ready meals, eating out more often or paying for school lunches when it might have been cheaper to take a packed lunch
- laundry fees – if the consumer has no kitchen or washing facilities, there may be additional costs for laundry services
- travel expenses – if the consumer has been relocated further away from their work or children's school they may to pay extra costs for getting to and from these places
- rehousing pets – if the accommodation doesn't allow for pets, consumers may have to pay for kennels or other accommodation for pets
- council tax – if a consumer has to move out of their own property, their local authority may be able to freeze their council tax if the property is going to be unoccupied for up to 12 months. Sometimes consumers might have to remain in alternative accommodation for longer than this and it may be that they have to pay council tax on their own home and their rental property. In situations like this, it would be unfair for the consumer to pay two lots of council tax, so we would expect the insurer to cover the council tax costs the consumer incurred over and above what they normally pay.
Putting things right
If we decide you've treated the customer unfairly, or have made a mistake, we'll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn't happened.
The exact details of how we'll ask you to put things right will depend on the nature of the complaint, and how the customer lost out. It will also depend on what the policy says, what’s been lost or damaged, and the customer’s own circumstances. You can also find detail on putting things right in our guidance on settling home insurance claims.
A flood can cause extensive damage, and the upheaval during repair or remedial work can be lengthy and exhausting for the customer. So we’ll consider whether you handled a claim sensitively and efficiently.
If we decide you’ve handled a case unfairly, we’ll consider whether to tell you to compensate your customer for the distress and inconvenience you’ve caused them.
Find more information about our approach to compensation for distress and inconvenience.
Customer complains after basement flood, because insurer will only pay for damage caused not for making the basement watertight
A customer complains his insurer won’t pay to repair water damage in his living room, because the circumstances weren’t covered by the policy
If you want to talk informally about a complaint you’ve received, you can speak to our technical desk. Our technical desk can give general information on how the ombudsman might look at a particular complaint. The technical desk can also offer guidance on our rules and how we work.