27 Sep How can cladding affect your insurance claim?
How can cladding affect your insurance claim?
Cladding is considered a popular material used to cover a building’s external wall or roof due to its light weight, architectural features, resistance to corrosion and many other benefits. A cladding material currently in focus is Aluminium Composite Panels (ACP).
The focus is due to non-conforming cladding identified as the promoting factor to the rapid fire spread of Melbourne’s Lacrosse Apartments, and more recently, London’s Grenfell Tower.
Some insurers have started to ask for more details in relation to cladding materials installed at a premises. Prior to providing terms the insurer may require specific details such as the type of material, location, approximate percentage installed in the building and the manufacturer. We anticipate all insurers will implement this additional line of questioning in the future.
Duty of Disclosure
Section 21 of the Insurance Contract Act 1984 requires the insured to disclose all material information that is relevant for the insurer’s decision making process. As part of your duty of disclosure, it is imperative to know and provide the information about the cladding material, any non-compliant material in concern or potential existence of cladding to your insurer. You will then need to obtain their confirmation regarding the implication to the current insurance cover.
How your insurer may decline a claim
Our aim at CRM Brokers is to ensure that your insurance policy responds in the event of a claim. That means ensuring the accuracy of the information passed onto the underwriter.
A potential reason for a claim declinature could be as a result of non-disclosure. Section 54 of the Insurance Contract Act enables the insurer to decline a claim to the extent the non-disclosure has prejudiced their interests.
Furthermore, we understand that some insurers are currently reviewing exclusions under their policy wording for damages arising from and/or in relation to non-conforming building products.
We strongly recommend taking reasonable steps to disclose information on cladding material to the insurer to avoid a potential declinature. Insureds can further mitigate the risks at the premises by regularly checking the fire protection and referring to building documentation for cladding information.
In the event the building documentation is non-existent, incomplete or not credible, it maybe appropriate to have the cladding tested by a specialist team. Please contact us if you do believe an investigation may be appropriate for your property.
Strata Insurance Renewals
There is potential for your current insurers not to offer renewal terms if the risk falls outside their underwriting guidelines. If this becomes a hindrance to your strata insurance renewal programme, please contact your CRM Brokers on 1300 880 494. We can source an alternative quotation from a specialised strata insurer.