The tenant of a cottage, valued at £1m, has been presented with a bill totalling £128,000, for damage caused by a pipe which burst and leaked during a cold snap in 2010.
The tenant, Ms Govina refused to pay the bill claiming that the damage should be covered by her landlord’s insurance. Ms Govina argued that, on a proper construction of the lease, the insurance was for the mutual benefit of both her and her landlady. The terms of the lease therefore preclude the insurers from looking to her for damages. The insurers, NFU Mutual, argued that she did not pay towards the landlord’s insurance. Ms Govina’s argument in that respect was that she paid towards her landlord’s insurance premiums as part of her rent. The insurers had previously met Ms Govina’s flooding claims. Ms Govina had maintained that the damage was caused by a failure with the heating system, and that she had arranged to keep the heating on to prevent such damage (despite being accused of failing to prevent the property’s pipes from freezing).
Points to note
Although Ms Govina claimed she had reviewed the provisions of the lease carefully in relation to insurance coverage and contributions, prospective tenants should always consider the following prior to entering into a lease:
- What are the terms of the landlord’s current insurance policy?
- Will the landlord agree to amend the policy so that it is expressed to be for the benefit of both the landlord and tenant?
- What are the insured risks under the lease, and what provision has been made for uninsured risks?
- Is the rent expressed to be inclusive of contributions to the policy premium, or is an extra ‘insurance rent’ chargeable?
Tenants also need to consider, if the landlord’s insurance policy is not expressed to be for the benefit of the tenant, whether the tenant might require a separate policy to minimise its liability for certain risks. This begs the question whether the tenant has in insurable interest in the premises in such circumstances.
The judgment in Ms Govina’s case has been reserved. The case is definitely one to watch for the potential implications it could have for tenants if the judgment is given in favour of the insurance company.