With the Grenfell enquiry likely to take over a year to complete it is worth looking the current impact of this tragedy on those who manage and live in tower blocks and other types of blocks where cladding could be an issue.
Whilst there are no building regulation updates as to cladding and whilst it also likely that the interpretation of the current regulations will change, the more immediate issue for managing agents and landlords is insurance of the block.
Insurers are becoming increasingly reluctant to cover buildings where the classing may be combustible and, as a result of this nervousness there are 3 issues which will impact on leasehold owners and their managing agents:
- The first issue is the cost of insurance. Whilst insurers are not withdrawing existing cover, when the policies are due for renewal the premiums on buildings which are perceived to be a risk are soaring. Many insurers are commissioning the Fire Protection Association to examine high risk blocks to advise as to the cladding and sprinkler systems. It is important that leasehold owners in blocks of this type are warned that insurance costs are very likely to rise unless potentially expensive major works are undertaken
- The second issue is the fact that insurers are, in some cases, adding exclusion clauses to their policies, limiting their liability where they do not have evidence that cladding is fireproof or where they have not seen an up to date fire assessment or there is no adequate sprinkler system. This is very important as it may be the case that the insurers do not draw your attention to such exclusions which poses an unacceptable risk to residents in the event of a fire.
- In cases where insurers are concerned as to the type of cladding they can insist that the cladding is replaced as a condition of insuring. If one insurer makes this request it is likely that others will do the same and the building could be potentially uninsurable until major works have been carried out. Obviously, such works cannot be carried out overnight and the risk here, which is huge in terms of the protection of the leaseholders and obligations under the lease, is that a building is uninsurable.
In the current climate it is clear that safety has to be a paramount consideration. There are ways to ensure the safety and protection of residents and satisfy the insurers but thinking ahead is critical.
If you are involved in the management or insurance of a high rise residential building then, for the reassurance and safety of the residents and to minimise the insurance policy then it is well worth being prepared. A thorough Fire Inspection Report should be commissioned and, if there are recommendations, these should be implemented as soon as possible, major works protocol permitting (unless, of course, the works required are urgent and safety critical). If a positive report can be produced to insurers this may minimise any increases that are likely.
Whereas insurers have, pre-Grenfell, looked at cladding in the context of positive factors, such as well-fitting fire doors and sprinklers, it is clear that this is no longer the case and, in high risk cases costs of insurance and the conditions attached are likely to soar. If this leads to more focus on safety and the prevention of another tragedy on this scale then there can be no argument against such a stance.