Since the Financial Services Compensation Scheme (FSCS) announced last month that they would be paying compensation to Alpha Insurance latent defects policyholders, thousands of home-owners have been seeking alternative cover.
This follows the collapse of the deal arranged by BCR Legal Group Ltd to provide replacement cover for Alpha’s 10-year latent defect/structural damage insurance policies due to a number of last-minute issues.
Alpha, who supplied the insurance required to cover structural defects affecting new homes, were declared insolvent in Denmark last May. At this time, anxious home-owners were gradually discovering that their homes were no longer covered by the insurance they’d paid for, causing problems with acquiring a mortgage or selling their properties.
For over a year, FSCA has been working with BCR Legal Group to attempt to provide replacement cover. When the deal they’d been working on collapsed, FSCA stated: “We recognise that a refund of premium may not be the outcome Alpha customers would have chosen and we deeply regret that it wasn’t possible to find replacement cover.”
At Advantage Insurance, which specialises in latent defects insurance, the team have been taking calls from hundreds of concerned home-owners, offering advice and quotations for new cover in recent weeks.
Sales Director David Sumner explained: “Our phone lines have been busy. Although the news that FSCA will be issuing compensation payments to those affected by the collapse of Alpha seems to provide some closure for home-owners, this is not the resolution that many had been hoping for.
“As Advantage specialises in latent defects insurance, working with leading insurers, a large number of home-owners who’ve found themselves without insurance have been contacting us requesting a quote for new cover, without which they may find themselves in breach of their mortgage terms and conditions and unable to sell their homes.”
Although the team at Advantage is working through all enquiries swiftly, helping to restore peace-of-mind to former Alpha policyholders, they share home-owners’ frustration that although compensation is being paid, as this will only cover the original Alpha insurance premium itself and will not cover any additional costs such as surveys and risk management, and will only cover the unused proportion of the premium (with payouts being limited to 90% of this cost), so those affected are being left to foot the bill to cover any shortfall when buying new structural defects cover.
Advantage Insurance was established five years ago and has become one of the nation’s leading provider of structural warranties, with offices in Warrington, Horsham and Birmingham. They work with leading developers and insurers nationwide and have been expanding their team following a rapid period of expansion for the business.