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In this edition of Ask the Experts, we answer some of your questions about the claims that we receive on our policies.

Q: Which policies receive the highest number of claims?

A: We issue more policies for residential properties than commercial, so it makes sense that we see more residential claims. Last year, the highest number of claims were received on Access, Restrictive Covenants, Lack of Building Regulations consent, Absent Landlord, and Search policies, although overall new claims were spread across a total of 77 different policy types.

Access policies have consistently received the highest number of claims for many years, largely because disputes relating to access are very much a ‘live’ issue when the access is in daily use. A simple change in the dynamics with neighbours, like a new owner, can suddenly create an issue, regardless of how much time has passed since the policy was issued. Claims on leasehold policies have increased in recent years too, most noticeably due to absent landlords reappearing and demanding outstanding ground rent, and for breaches of leasehold covenants where the landlord hasn’t consented to past works. We’ve also seen a rise in search claims, as well as a rise in historical rent charge claims due to active commercial rent charge owners.

Q: Are claims on commercial properties more expensive to resolve than those for residential properties?

A: As you might expect, commercial claims do tend to involve higher figures due to the larger sums insured, the complex nature of disputes involving development sites, and the legal costs that can be incurred to achieve a positive settlement. However, in the last year we have settled a higher number of costly claims for existing or newly built residential properties. The dynamics involved often mean individual claimants can be stubborn and more emotionally invested in the dispute compared to commercial claimants, who are often more prepared to negotiate and agree a settlement.

Q: Are claims costing more to resolve than they used to?

A: The short answer is yes, and there are several reasons behind this. Even weak or speculative claims brought against a policyholder can be costly, as solicitors’ letters are often required to help successfully defend the action against a third party. We have also noticed that third-party claimants are becoming more persistent, even when their legal position is weak – perhaps the result of an increasingly litigious society. The impact of inflation needs to be taken into consideration too. This has had a noticeable effect, especially where works have to be completed to resolve a claim, because of higher material and labour costs. For example, on lack of listed building consent claims, the average cost of replacement windows is now between £20,000 to £25,000, compared to around £10,000 a few years ago. Unlike other industries affected by rising inflation over recent years, we have been able to maintain our pricing levels, and our premiums have remained unchanged.