Landlords were served with a warning in Ansari v New India Assurance Limited (2009) to pay attention to the accuracy of the information given to insurers about their leased property and to notify insurers of any changes in circumstances.
In Ansari the landlord placed insurance on the building. In the proposal form he described the business as ‘Wholesaleing kitchenware’. Against the question “Are the premises protected by an automatic sprinkler system?” he answered “Yes”.
The premises were later seriously damaged by fire and the landlord made a claim. The insurers rejected the claim and cancelled the policy on two grounds. Firstly the water supply to the automatic sprinklers had been turned off, and a filing cabinet placed against the handle of the control value to prevent it from being turned on. Secondly, many of the goods in the building were not kitchenware – they included scooters and mini-motorbikes.
The Court held rejected the landlord’s argument that the premises were protected by an automatic sprinkler, even though it was switched off. They held that if the sprinkler was off, the premises were not ‘protected’ by it. They found in the insurer’s favour and ruled that the presence of items that were not kitchenware in the property amounted to a change of use which invalidated the policy.
In the light of the Ansari case it is important for landlords and managing agents to check what information was given to their insurers in the proposal form, to check whether those statements remain true and to check that the contents of the lease comply with the information given to the insurer in the proposal form. Any landlords who have not recently inspected their properties should arrange an inspection to ensure that the tenants’ actions have not invalidated the insurance.
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