In recent months, FMB Insurance has received calls from builders, who at the point of completing developments, find that they cannot sell the properties because the 10-year Structural Defects Insurance Policy they had bought is no longer being recognised or accepted by mortgage lenders.
In this instance, the structural defects policies had been underwritten by Alpha Insurance A/S, a Danish firm, who went bankrupt earlier this year. According to the Alpha Website and the Danish regulator, all Alpha Insurance policies will terminate on 11th August 2018. Advice from the Financial Conduct Authority (FCA) is for UK policyholders to immediately find alternative cover *.
Members should be reassured that FMB Insurance has never worked with Alpha and so FMBIS New Homes policyholders are unaffected.
But what should builders do if they suspect their policy is no longer valid?
- Check through the documents you received with your policy to determine who underwrites it. If the documents you have are not clear, you can send them to FMB Insurance to look through your documentation and confirm this for you.
- Contact either the warranty provider or broker that you purchased the policy from to check your position.
- If you are selling the property and are aware of which mortgage lender will be financing the purchase you can contact them directly to check they still recognise your policy.
- If you paid the policy premium by credit card, it may be that a reimbursement is available from your credit card company. You should contact them to see if you are eligible for a refund in this way.
- With regards to the case of Alpha Insurance, the Financial Services Compensation Scheme (FSCS) is in contact with the Danish Guarantee Fund, who are assisting UK policyholders. The Danish Guarantee Fund can assist UK customers with private insurance policies. In the event that the Danish Guarantee Fund cannot assist then that FSCS may be able to. Further information can be found on here.
The FCAs recommendation is for alternate policy coverage to be sourced as soon as possible. FMB Insurance can provide retrospective new homes warranties and its policies are recognised by lenders, which will ensure that you are able to sell the properties on completion. For further advice, support and assistance, please call 01353 652760, email [email protected] or visit our New Homes Warranty page.
FMB Insurance also sells a wide range of insurance products to support members’ needs. For an informal discussion about your insurance requirements, please do not hesitate to contact us.
[Footnote: Please find the relevant FCA statement here]