Huge rise in agents’ insurance claims as ambulance chasers help tenants win deposit money

There has been a huge increase in the number of claims agents are making on their professional indemnity insurance about tenancy deposits.

According to Lonsdale Insurance Brokers, which specialises in insurance for estate agents and letting agents, the most likely claim arises after a tenant blames the landlord for a deposit lodged late or incorrect prescribed information.

Typically the tenant – who may well be prompted by a no win, no fee ‘ambulance chaser’ firm – succeeds in winning three times the amount of the deposit from the landlord; the landlord then brings a claim against the agent, who in turn claims on their insurance.

The report uses claims data from law firm DAC Beachcroft which acts on behalf of numerous insurers.

In the first quarter of this year, DAC has seen 25% of its claims relating to deposits not being lodged on time.

This compares with 3% for the whole of last year.

The figures also show a consistently large proportion of agency claims over property management services and repairs – anywhere between about a quarter and half.

Claims arising out of referencing are down, and have barely moved on misdescriptions of properties.

Lonsdale says in its latest report on risks for property professionals that the industry has “faced some of the most challenging trading conditions and are likely to experience continued uncertainty and turbulent times over the next 12 months”.

The report cites GDPR, the impending letting fees ban and the forthcoming imposition of mandatory Client Money Protection insurance as risks to agents.

The report also states that under half of agents in England do not display their CMP correctly, as is already required.

Lonsdale warns that they would be liable for a fine if Trading Standards were to visit.

However, a Professional Indemnity policy does not cover fines. Instead, it responds where a claim is brought by a third party who has suffered a loss as a result of the agent’s breach.

Lonsdale’s latest report also specifically warns agents to protect their position as much as possible when they give market appraisals. They should make it clear that it is an estimate only, rather than a professional valuation.

 

http://www.lonsdaleib.com/images/Professional_Risk_Associated_with_Property_Professionals__June_2018.pdf

Reapit 2
x

Email the story to a friend

One Comment

  1. ErnestBeard

    Thanks for sharing the great read. No matter which type of insurance a person is enrolling himself in, what matter is the benefits one can get from the insurnace. Different insurance have different assets and different poilicy. Like, if considered about the health care insurance, a person can be bound with a numerous benefits. But the important point of consideration is choosing the trustworthy broker or a company who can guide in selecting the best possible insurance as per your comfort. Depositing money in any insurance plan is normal, but what matters the most is the benefits one will get in return after claiming it. More details regarding the health insurnace plan can be found at the source: https://www.thehealthexchangeagency.com/namsa-member/

     

    Report
X

You must be logged in to report this comment!

Comments are closed.

More top news stories

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.