Tenant Wins £128,000 Home Cover Case With Insurer

A home insurer has lost a claim for almost £128,000 compensation after paying out for damage caused by a leaking pipe against a multi-millionaire tenant.

NFU Mutual went to the High Court after scientist Galina Govina rejected a demand from the company to pay for the damage.

She rented the £1 million thatched home in West Grafton, Wiltshire, for £2,800 a month from a landlord who had home insurance cover with the company and argued the tenancy agreement showed the landlord would insure the property against all risks for both of them.

However, the insurer argued Ms Govina, 54, was at fault because while she was away from the cottage over Christmas 2010, a water pipe froze and burst. The leak flooded the cottage leading to the insurance company picking up the £128,000 tab for the repairs.

The company claimed the insurance was taken out for the landlord’s benefit and that the pipe burst because Ms Govina breached her tenancy agreement by failing to leave the heating on low while she was away.

Ms Govina argued that she did leave the heating on, but the system malfunctioned.

The case examined the insurer’s right of subrogation – the legal process that allows an insurance company to claim compensation from a third party responsible for an insured loss.

The court rejected the insurer’s claim that they had a right of subrogation against Ms Govina.

The court agreed with her that the insurance was taken out for the benefit of her and the landlord, so the insurance company had no right to claim money from her.

The company also failed to produce any evidence to rebut Ms Govina’s statement that the heating broke down.

Speaking for Ms Govina, barrister Andrew Butler said his client was shocked to receive the bill.

“This was not an uncommon form of a tenancy agreement. There hasn't been a case like this before in a residential context,” he said.

“If the judge found that the insurance policy didn't apply for both the landlord and the tenant, that would certainly be a point of concern for tenants.”

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Buildings insurance covers the risk of damage to the structure and permanent fixtures and fittings of a building, for example, due to a fire. If the property is leasehold, the freeholder will typically arrange the building's insurance and re-charge the cost to lessees.