Combustible Cladding and Buildings Insurance

Residents of flats with combustible cladding and other unsafe building defects are facing another blow as building insurance costs go through the roof, with some insurers refusing to provide cover.

Why are Insurance Costs for buildings with cladding rising?

Historically insurers of high rise buildings would have allowed for losses caused by fire damage to just a few flats within a building.

This was because the building should have been constructed with materials resistant to the spread of fire, with measures such as fire breaks between flats to contain and limit any damage.

Sadly, we know from our own work surveying buildings for EWS1 forms that many buildings have been poorly constructed. Even in instances where the cladding itself is not combustible we have found missing or badly installed cavity barriers, which are intended to prevent fires from spreading horizontally or vertically into neighbouring flats.

This can change the basis of insurance cover for buildings, with the maximum liability increasing from a few flats to the total loss of the whole building.

Insurers are having to work on the basis that the risk and costs of fire in multi tenanted buildings are significantly higher than previously thought.

Fire Risk of Whole Building Loss – Case Study

According to evidence submitted as part of the pre-legislative scrutiny of the Building Safety Bill the residents of Richmond House in Worcester Park lost all of their homes due to missing or inadequate cavity barriers.

Richmond House was a four storey block of 23 flats constructed in 2011. According to a report by Probyn Miers the building’s pale grey clapboard cladding, called Hardie Plank cement board, had one of the highest fire resistance ratings for ‘limited combustibility’. It does not flame, produces little or no smoke and no burning droplets.

Between the cladding and the frame of the building there was a 16cm gap where cavity barriers should have been installed. These are designed to slow the spread of the fire between flats and allow time for firefighters to tackle it within a limited area.

At Richmond House the cavity barriers were missing or defective and would have contributed nothing to the control of a fire.

Nothing short of an intrusive inspection, opening up parts of the cladding to reveal the make up of the external wall underneath would have revealed the issues with the construction of this building.

The fire at Richmond House started during the night of 9 September 2019. Firefighters arrived within 9 minutes of the first 999 call, with a total of 125 firefighters sent to try and tackle the blaze.

Despite this the building was completely destroyed in approximately 11 minutes once the fire had taken hold. It was due to luck and the action of residents in alerting their neighbours that everyone safely evacuated the building.

What can be done to reduce Risks & Insurance Premiums?

Many buildings with cladding and fire safety issues have brought in expensive waking watches as a temporary measure pending remediation. The main purpose of a waking watch is to save lives, not buildings, by alerting residents to evacuate and calling the emergency services. They are not a solution for preventing costly damage to a building and reducing the cost and risk from an insurers perspective.

The addition of sprinklers to a building might have an impact on an insurers view of risk. However, in the case of Richmond House the internal passive safety measures, such as appropriately constructed internal walls and fire doors did their job and held back the fire.

Sprinklers would do nothing to reduce the risk of combustible cladding and missing or faulty fire breaks.

The only way to reduce the insurers risk is to undertake a survey of the external wall make up that confirms a building does not have combustible cladding or other fire safety issues. Until a building is inspected insurers will assume the risk is of a total loss and price insurance accordingly. The potentially higher risk will already be priced in.

Conclusion - Combustible Cladding & Buildings Insurance

Ultimately the solution to reducing the fire risk of multi tenanted residential buildings is to fix them, and surveys to assess buildings is the first step.

Issues associated with the Cladding Crisis apply to buildings of any height and have significant financial as well as safety implications.

Government measurers to mitigate the crisis have so far been inadequate, with the Building Safety Fund limited to buildings over 18m high. The logic of this strategy would appear to be that lower rise buildings aren’t such a safety risk. Unfortunately, insurers and mortgages companies don’t agree. With the Government promising to fix the cladding crisis earlier in the year, further measures will be needed if they are to grasp the scale of the problem.

How can Anstey Horne help?

Anstey Horne can assess existing buildings to review where there may be potential issues to consider. We can help you understand how these can be repaired in line with your own obligations and government guidelines including how much it will cost and how long it will take.

The team can also advise on how you can access the Government’s fund for remediation of ACM cladding, and the £1 billion Building Safety Fund.

Our experts understand the EWS1 assessment process including what information is needed and at what stages. The team includes several of the few specialist EWS1 Assessors accredited by the RICS.

We also provide advice on the procurement of a specialist design team of fire engineers, cladding engineers and cost consultants to provide full remediation of the external façade.

Follow the link for the latest RICS guidance note 'Cladding for Surveyors, 1 Edition, March 2021'.

In January 2022, the Government withdrew the Consolidated Advice Note (CAN), which had led to the development by the RICS of the EWS1 Form.

To understand what this means for valuers and lenders who previously required EWS1 Forms, see our article. Check out our news posts on EWS1 forms for buildings without cladding and the Lords amendment to ban leaseholders from paying for cladding.