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What is the maximum amount of claims you can make on the policy?

There is no limit to the number of claims you can make on your landlord’s insurance policy. Even so, there are several provisos that you will certainly need to consider.

Principles

In an article dated the 26th of January 2021, the Financial Ombudsman Service explains that most home buildings and contents insurance policies are “policies of indemnity”. This is a specialist term meaning that the policy is designed to put you back into the same position as you were before the loss or damage covered by the insurance occurred.

By way of example, if the building is totally destroyed, your building insurance is designed to cover the cost of clearing the ground, legal fees and reconstruction – so, giving you a home of similar size and standards to the one that was lost. If a household item or personal belonging is lost or stolen, your contents insurance is designed to replace it – so you are in more or less the same position as before the loss.

These principles help to explain why there is no limit to the number of claims you can make – but that bold statement is subject to several limitations.

Policy limits

Although there is no formal limit on the number of claims you may make, you must be aware of the policy limits regarding the maximum amount payable under any single claim.

With respect to your property insurance, for example, there will be a maximum building sum insured (the maximum amount the insurer is obliged to pay in the settlement of any claim for loss or damage to the structure and fabric of your home).  And a maximum contents sum insured (the maximum payable in settlement of a claim for theft, loss, or damage, to the contents of your home).

In addition, there might be sub-limits on particular types of claim – these are detailed within your policy document.

Policy excesses

Your policy documents also identify the excesses that will attach to particular types of claim – excesses that are the first part of any successful claim and for which you remain financially responsible.

Once again, there may be sub-divisions for the amount of excess payable – for example, £100 for each item of contents for which you might claim, but £1,000 for a subsidence claim.

Every time you make a successful claim, you will be liable for the excess amount. As it is the first part of the claim, this is the amount that you agree to contribute and would have been agreed at the time that you took your cover out.

For example, if you make a claim on your policy for £1,000 worth of damage and your policy excess is £500, then in the event that your claim is valid, you will receive £500 (as you have agreed to pay the first £500 towards the claim).

Time limits

In addition to checking that your policy covers you for the losses or damage for which you are claiming, Citizens Advice also warns that most policies also have a time limit within which you must make your claim for any loss or damage.

Time limits are discussed in more detail in an article by lawyers CMS on “Insurance Law and Regulation in England and Wales”.

Loss of no claims discounts

Recognise that any claims you make on your insurance policy are almost certain to affect any no claims bonus you might have built up – the discounts you were awarded for those years during which you made no claims.

Beware, too, that – quite apart from any no claims discount – your claims history can also affect the premiums you are charged, warns credit reference agency Experian. When calculating their premium rates, says Experian, insurers typically look at the claims history of your home over the past five years or so. If you have made several claims – especially large ones – you can expect your premiums to be increased, as it becomes classified as “high risk”.

Action

At Cover4LetProperty we do understand that sometimes having to make an insurance claim is unavoidable – that is why insurance exists, after all.

To keep your premiums manageable, however, you may wish to avoid making “smaller” claims. In the example we gave earlier, for instance, a successful claim for £600, after the deduction of a £500 excess, would leave you with just £100. In cases like this, you may wish to cover the additional cost yourself in order to keep your insurance premiums for the forthcoming year at a more attractive rate.

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