Is your insurance policy ‘subject to survey’ and, if so, what does it mean?
An insurance risk survey helps insurers to understand the levels of financial risk they may be exposed to by offering insurance cover. With commercial buildings – and flats are classed as commercial buildings for insurance purposes – the insurance company taking on the risk will usually arrange for a risk surveyor to visit the premises and undertake a risk assessment survey.
So, when a policy is issued subject to survey, it means that the insurer has provisionally accepted the risk and you are covered, however, the terms could change depending on the survey results. Unless expressly stated otherwise in your policy, until the insurer commissions and arranges the survey, then there is no onus on you to do anything. You will be covered by your policy, subject to normal rules about honest disclosure of matters that might affect an insurer’s decision to offer cover.
The survey report may determine that some improvements could be made to reduce the risk of future insurance claims. This might, for instance, relate to your fire safety procedures, security or general hazard prevention, such as fixing loose carpets or removing obstructions in the entrance hallways and on landings. The insurance company will then communicate what needs to be done back to you through your broker and monitor improvements through to completion. Any action points are divided into requirements for urgent attention within a specific timeframe and recommendations based on best practice.
The survey is likely to focus on fire perils, accidents and liability, mechanical equipment and your risk of burglary. Examples of things checked could include repairing any damage found, redecorating periodically, clearing leaves from gutters, ensuring bin stores are kept tidy and don’t pose a fire hazard, having lifts inspected in accordance with the law etc.
In many blocks, there are no action points at all. Nevertheless, we think a surveyor’s visit, which will not incur additional costs to you, is a good opportunity to pick the brains of highly experienced professionals. Think of it as a ‘health check’ for the building.
Surveys may not take place for many months after a policy has been taken out. However, as long as the property has been continuously insured then, should a claim arise before the survey is undertaken you would not be without cover. If there is a gap in cover, then the insurer may question what might have happened in that time. In the case of a block of flats, such gaps in cover are unlikely as the freeholder’s duty to maintain continuous insurance is almost certainly going to be a condition of the lease. After all, leases bind the freeholder to their terms just as much as individual leaseholders.
FP903-2021
The sole purpose of this blog is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Deacon accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.