There is a growing number of properties in the UK that now fall into a category known as non-standard as labelled by insurance companies. What is this new category and what impact does it have on homeowners?
Non-standard is an insurance term used to describe a property risk; this breaks down into smaller sub categories of;
• How old the property is?
• What building materials it is made from?
• Is the property near any natural perils e.g. waterways
• And what the property use is going to be
It is reported that approximately 30% of home in the UK are now included in the non-standard category due to the answers of the above questions. If we look closely at the questions we start to understand more about what insurance companies are looking at when they assess the risk of the property.
How old is the property?
A properties age can impact the risk of the property at both ends of the age spectrum. Naturally, very old properties can call into question the structural stability, if there has been any movement in the foundations and also is the property now classed as a listed building. New builds also raise concerns in terms of new and modern construction methods. Some insurers underwriters still want to see the longer-term sustainability of modern building materials e.g. SIPS panels.
What are the materials it is made from?
Most insurance companies would like to cover properties made from brick or stone with slate or tile roofs. Whilst this covers the majority of UK home, there are a growing number where this is not the case. There are many alternative building materials that have been used historically and in modern building methods. These include timber frame, steel frames and even composite materials. Rectifying damage after a claim can be costly for insurers due to the often-high cost of new materials and expertise labour costs.
Is the property near any natural perils e.g. waterways?
Water is possibly the biggest risk (next to fire) for an insurer, due to the potential devastation and loss of contents and property stability. Claims can run into hundreds of thousands and often for multiple properties within the affected area. The result is the situation we see today where insurers back away heavily form flood plains and other areas close to waterways and seas.
What the property use is going to be?
Whilst it maybe obvious that the insurance will cover people living at the property, homeworking is on the rise as workplaces look at flexible working conditions. The need for people to be on-site at an office is getting less due to the ability to remote work. This ‘working from home’ activity can also be classed as home insurance with business use. Your insurer needs to be aware that this activity takes places, even if it is infrequent.