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Our buildings insurance has skyrocketed by 2000% in one year

Southend-On-Sea’s Skyline Plaza is believed to have suffered the largest buildings insurance percentage increase in the country as a result of the cladding scandal. A resident tells their story.

This is a guest article by Lee Lawrence. All views expressed are Lee’s own and not necessarily shared by Which?. 

If the last year has taught us anything about the communities we live in, it might just be that we’re stronger as a collective unit. Neighbours came together and a community of volunteers ignited a sense of pride and togetherness amongst the dread.

As parts of the country begin to re-open this year, for some communities the pressure has only increased.

Skyline Plaza in Southend-On-Sea, Essex, is a modest block of flats. Slightly rough around the edges, but home to a great community of nurses, teachers, builders and keyworkers: decent hard-working families. I moved into the block in 2018 with my wife and two young children and we quickly settled into our new home.

Last year we were told that the building’s cladding needed to be replaced after a sample was taken and tested following the horrific Grenfell fire tragedy. The deadline for the funding was nearly up but we were lucky to have a great team of residents who work on the Right to Manage (RTM) company in tandem with our property manager. They were able to acquire funding that would spare us from potentially unaffordable costs.

An ‘exorbitant’ insurance hike

Things were starting to look up for the residents until our buildings insurance was due for renewal.

While insurance has been skyrocketing for buildings caught up in the country’s ongoing cladding scandal, as reported by Which?, nothing could have prepared us for the news we were about to receive: just one company was even prepared to give us a quote, and that quote was in excess of £240,000.

For context, last year’s premium was just over £11,000: that’s nearly a 2,000% increase in just a single year. That means that every resident here will need to find between £4,000 and £6,000 each on top of our usual annual service charge.

This exorbitant amount needs to be paid upfront and in full. With most of the building consisting of low-income families this will be a struggle for most and impossible for others.

I work in Southend as a support worker housing people who have become street homeless – it crossed my mind that my next client could be someone from our block or another affected building in the area.

There’ll be nothing left

We’re extremely fortunate to have had our cladding works accepted for funding while other buildings have not been so lucky, but in the meantime we need to fund a linked fire alarm system to negate the need for a 24/7 waking watch (fire patrol) for the length of the works. This would cost another £300-£500 per flat.

Which? News: Five major costs the cladding crisis is piling on homeowners

We cannot afford to keep paying like this – eventually there’ll be nothing left.

The community of Skyline has come together again so far to spread the word of the awful predicament that many homeowners have found themselves in through no fault of their own.

We’re attempting to use the collective power of our communities to make a stand and voice this abomination to the people who have the power to change things. This can’t carry on, and we need help.

This was a guest article by Lee Lawrence. All views expressed were Lee’s own and not necessarily shared by Which?. 

The cladding crisis has had a devastating financial and emotional impact on flat owners across the country, with many facing astronomical bills if their residence was found to have unsafe building materials.

Our research has revealed how those affected by the scandal have seen their buildings insurance premiums skyrocket, or have been unable to secure cover from any insurers. There is currently no government support to pay for these eye-watering insurance bills, and for many, they are proving unaffordable.

Have you been affected by spiraling buildings insurance premiums as a result of the cladding crisis? Let us know in the comments.

Comments

Insurance companies are commercial operations that look at risk when assessing a premium. Imagine what the payout would be if this block suffered the same fate as Grenfell. Therefore I am not surprised at the premium, or reluctance to insure.

The key is to remedy the construction problem as quickly as possible.

That leaves the question of who should pay. As far as I know, in a let building it is the landlord’s responsibility; they will, of course, pass this on to the tenants. In turn the landlord should be seeking redress from the builder if the block were built defectively. This is where it gets very murky, isn’t it?

So should the local authority pay if they have been negligent in planning control. Yes, but the public will still be the eventual funders. Should the government simply pay for builders errors? It is a pity that when the builders go out of business there is no industry fund to provide recompense. Should the cladder or cladding company pay if the cladding did not meet building regulations? Of course, but that might be difficult to reclaim.

There is no easy answer to this. Mainly because of the very large sums involved that are beyond the means of many householders. It may be that where no negligence is involved very long term loans at fixed low interest rates are offered to building owners, and they are legally required to bring their buildings up to standard. Then insurance will no doubt return to normal. Meantime a similar loan scheme might apply to cover temporarily high premiums. The key is surely to make the building safe to live in as quickly as possible.

I wonder whether the risk has been fully assessed. The Grenfell fire was a great tragedy but has not been repeated, despite there being hundreds of buildings said to be at risk. That is not to underestimate the possibility of another tragedy but to question whether insurers are being overcautious, because of the huge sums involved in the event of a claim. Maybe the insurance industry as a whole, rather than individual insurers, should offer a scheme for insurance and spread the risk across all their members. Or maybe the government should take on the insurance directly and charge a more affordable amount?

The Granfell fire was indeed a tragedy. We all agree with this. But the reaction was one of panic. These buildings have had, unknowingly, this bad, dangerous, cladding for many years now. As pointed in your article, we have had no repeat tragedies, and the likelihood of it ever happening again is minimal. We all thank God for this. This brings us to the real facts. Insurance companies are just profiteering at our expense. They want to pocket £240,000 knowing fully well that the likelihood of anything happening is absolutely minimal, probably non existent.
What I suggest is, just pay the same insurance premium for the normal cover the Insurance companies have always covered. Put in an exclusion clause….. should anything on the scale of Glenfell occur, then the government would cover that insurance, giving people who live there a safeguard that they will not lose their homes in case the worse scenario were to happen.
If every time there is a major accident all things came to a halt, then all motorways would be shut, and all commercial planes would be grounded. This is a knee jerk reaction. The government are over reacting to this terrible accident in Grenfell. Yes, the cladding should be replaced, but done in a way that does not leave leaseholders bankrupt. What a lot of nonsense to talk about a waking watch!! How ridiculous is that! Someone walking around the building, day and night, looking out for smoke.
We already have smoke detectors in all apartments, and a fire alarm in the building to alert all residents in case of a fire!! Surely there must be a better way.

Splitting the risk, as you suggest, seems a good idea.

My disgust yesterday, after Parliament’s decision not to include measures in the new Fire Safety Act, was that the government had under reacted, not over reacted, to the situation facing leaseholders. One government spokesperson after another parroted the phrase that the costs of remedial work should not fall on leaseholders but on the owners of the buildings [freeholders], or the developers, or the construction companies. I am sure most people agree, but nothing has been done to bring about that outcome. “Should” is a wonderful word but without some form of legal provision freeholders will continue to expect and demand that the leaseholders pay through their service and maintenance charges for the interim safety measures and the permanent rectification works respectively.

My view is that, just like when banks were on the brink of collapsing, the government should step in, sequestrate the assets, carry out the remedial work, and not return the assets to the freeholders until the expense has been recouped. That would release the leaseholders from the straitjacket in which they find themselves so that the buying and selling of the individual units could proceed again without distortion, that any tenants of the leaseholders could be spared the risk of massive rent increases that would eventually make the apartments unlettable and further impact on the leaseholders, and provide the safety state that residents are entitled to in modern buildings signed-off as compliant with the building regulations.

I feel that the government has deliberately refused to understand the complexities of the consequences for owners, leaseholders and tenants following the expert examination of all the high rise residential dwellings, and it has been in denial over the shortcomings of the building control system that has clearly led to the erection of unsafe buildings with inadequate alarm systems, absent firebreaks between units and exit routes, flammable balconies, and cladding systems that provide a firepath as evidenced at Grenfell Tower.

Perhaps the government considers that with all the trouble and expense of Covid-19 it is just too much to intervene effectively in this problem, but coronavirus has at least shown that “needs must when the devil drives” and inordinate amounts of money can be found when necessary. The government blathers on about being fair to the taxpayers, but if I can speak on behalf of taxpayers I would say that we would prefer to find a bit more and reallocate the spending priorities if the alternative is to leave hundreds of thousands of people in financial ruin and having to live in badly-built buildings.

I want to see the control of building construction being properly dealt with by local authorities and them taking responsibility for ensuring that buildings meet regulations, not just on paper but in practice. That should deal with faulty construction and the use of inappropriate materials. The money to fund the qualified staff needed would come from planning fees charged to the developers.

A significant additional tax on all significant developments, whether housing or commercial, should be introduced to raise the money needed to remedy defective buildings from developers.

Just as the funding of Trading Standards should be partially funded from penalties levied on organisations who break the rules.

Phil says:
30 April 2021

For those that hadn’t noticed a Bill went through Parliament earlier this week which, despite opposition, made it the responsibility of the leaseholders to pay for cladding to be replaced.

I wonder how hard the landlords lobbied to get that pushed through.

The fire at Grenfell was caused by a faulty electrical appliance, there are around 36,000 domestic fires every year, 20,000 of which are caused by electrical faults; 89% by faulty appliances. The chances of another Grenfell are far from infinitesimal and this is reflected in the insurance premiums. Currently residents are trapped in homes which are fire traps, which they can’t sell, can’t afford to put right and can’t afford to insure all through no fault of their own. It can’t be fair or reasonable to expect them to have to pay to fix something which isn’t their fault on a building they don’t own.

I used to work in the construction industry and I’m still shocked that this ever happened. The risks of cladding fires was recognised back in the mid-80s and we should’ve had proper standards and inspection regimes in place by now.

Even though it is difficult to prevent a fire starting in electrical appliances it would be possible to design them to contain a fire, so that it does not spread. Replacing plastic parts in the casing with metal is the main change that is needed.

Phil says:
30 April 2021

Insulation would be needed too. Metal can get hot enough to ignite whatever is on the other side of it. Might work on large appliances but would make smaller items such as ‘phone chargers unacceptably bulky.

The best approach is to design and build appliances such that the risk of them catching fire is kept to a minimum. With so much built on the cheap in far corners of the world this does not always happen and the CE mark doesn’t mean anything.

The Grenfell fire tragedy was caused by a defective building. Any source of fire within the building could have been the trigger, such as cooking appliances that cause far more fires than other domestic appliances.

As regards containing fires, if Which? took up BSI’s offer to join and contribute to their committees work then proposals that have merit posted here might get an airing.

The use of flammable plastics for consumer units was banned several years ago despite them being responsible for a relatively small number of fires.

Phil – A fire will go out when the oxygen in the appliance is consumed, so the case would be unlikely to get hot enough to ignite surrounding wood etc. If you set light to the contents of a metal dustbin the fire will go out promptly.

Small electrical items are relatively safe if they comply with the required standards but the ones from distant lands sometimes do not, as you have pointed out, and it’s difficult or impossible for the user to tell. We can help protect ourselves by buying known brands from well established retailers but if you live in a flat or tower block the other residents might not be so careful.

Without checking I doubt flammable plastics, in that sense, were ever allowed but I might be wrong.

As I have pointed out many times international safety standards for domestic appliances only allow non-metallic ( e.g. plastics) materials that are resistant to burning and the spread of flame. There are a large number of plastics successfully (safely) being used in critical applications – airplanes for example as well as your car.

The way to deal with product safety is through international standards. Anyone can contribute to their development by contacting BSI. Including Which?

I have posted numerous photos of white goods where the plastic case parts have burned or melted, allowing fire to spread. I have now met two firefighters who have seen examples.

But you seem to be reticent about making your proposals known to those who could subject them to expert scrutiny and consider their contribution to product safety. With respect, posting here appears to get nowhere; Which? seem to have no interest in taking constructive proposals on board nor in proper engagement with the standards development process.

Phil says:
30 April 2021

The fire spread because the building was defective, people died because the building was defective and because the advice they were given was defective but the cause was loose connections on a fridge/freezer.

Which? used to contribute to standards committees. These days they lack anybody with sufficient technical or scientific knowledge to make any useful contribution.

Phil says:
30 April 2021

” A fire will go out when the oxygen in the appliance is consumed, ”

Not sure how feasible it would be to make every appliance airtight and most will need some sort of ventilation for cooling.

I’ve spent time looking at white goods design and I believe that it is viable with the possible exception of vented tumble dryers. I’m happy to discuss this in The Lobby, Phil, rather than in a discussion about exorbitant building insurance. Incidentally, I agree about expertise and believe that Which? buys in expertise where needed in many areas.

I’d suggest many people have looked at white goods design, particularly those in the industry with much expertise. As I suggested earlier, safety concerns are dealt with by the international standards organisations whose expert committees consist of a very wide spectrum of knowledge and backgrounds, representing different interest groups. UL in the States (originally Underwriters Laboratories) many years ago looked at certain sealed domestic appliances, are a member of the relevant ISO committee and have no doubt used their wide knowledge in the development of standards. I expect that whatever merit they have demonstrated in their safety investigations will carry considerable weight given the influence they have on the standards adopted bt the USA/Canada/Mexico.

I’d suggest the way to get “good ideas” properly considered is to make the relevant bodies aware. BSI, from my experience, are a receptive body and take part in international standards development. This is a good time to make representations as there are international working groups currently looking at fire in certain domestic appliances. They are clearly aware of problems.

For years I lived in a bungalow that was a short walk away from a river. Although no homes were flooded the area was designated a flood risk area and about nine years ago I was quoted £1300 for my home insurance renewal. I was not told this was because of the flood risk but discovered that my neighbours could not get flood cover. None of the Which? recommended providers would provide a quote but when pressed one suggested I should approach Towergate, which provided cover at a more sensible price.

The government investigated the high cost of insurance cover in flood risk areas: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/388915/flood-re-gov-response-201412.pdf My understanding is that the situation has improved for those who live in problem areas, including the neighbour who managed to regain flood insurance.

Perhaps the government should intervene in a similar way to find a solution for those who are temporarily facing exorbitant charges because they have fire risk cladding.

Phil says:
2 May 2021
Phil says:
2 May 2021

This whole documentary is interesting and relevant but from about 45 minutes there’s a short discussion about the fire risks from cladding. At the time cladding was being proposed as a solution to the water ingress problems common to many system built blocks. It was made in 1984…

https://www.youtube.com/watch?v=Ch5VorymiL4