Wear and tear

Publishing UK insurance claim success rates for the first time in the organisation’s history, the Association of British Insurers (ABI) reported in January 2016 that 21% of claims people made against home insurance policies were rejected with no pay-out made[1]. One of the key reasons cited by the ABI for this proportion of home insurance claims failing during 2013 and 2014 was wear and tear, which is evidently something not all homeowners are familiar with.

Wear and tear defined

Broadly, it refers to the natural, inevitable deterioration of a property and its contents throughout the progression of time. Just like a motor vehicle gradually sustains signs of use over the years of its ownership, such as minor paintwork scratches and seat stains, the same is true of a home.

Cosmetic wear and tear

All properties and their contents will be subject to wear and tear from the moment they are used by one or more people, especially if they are homes enjoyed by a number of generations including grandchildren who visit.

It’s very rare for even a relatively new home to have pristine walls, floors, carpets, skirting boards and windowsills. As people move around a home, with objects placed on various surfaces, pictures hung up and later replaced and furniture reorganised, it’s only natural to expect that scuffs, chips, scratches and other marks will begin to appear. Even vacuum cleaners butting against skirting boards can create wear and tear.

Contents are also prone to wear and tear, from curtains becoming faded and frying pan handles loosening and falling off, to electronic gadgets packing up.

Structural wear and tear

Homes and their exterior fixings are inevitably subjected to wear and tear as properties age. Rain, wind and sun can all gradually have an effect on window frames, tiles and brickwork. Leaf accumulation takes its toll on gutters, shaded houses or those built on particular types of ground can suffer mould or damp issues, and even footballs, wheelbarrows or other objects can leave minor damage on exterior walls.

Buildings insurance does not cover wear and tear unless expressly stated; otherwise the insurer would effectively be paying out for basic home maintenance that all property owners need to keep on top of anyway. This is why, for example, claims for leaks can be turned down if it’s discovered that a home’s guttering hasn’t been maintained or loose ridge tiles haven’t been addressed.

Policy types – ‘new for old’ or ‘indemnity’

Home contents insurance policies typically exist in two forms, the first referred to as ‘new for old’, which commonly means that customers’ eligible items subjected to theft or damage are either repaired or restored to their former condition, or replaced by new ones of the same specification and value. Depreciation isn’t taken into account. Where it’s not deemed feasible to repair or replace an item, an insurance settlement in the form of cash is generally offered instead. Even where new for old cover is provided, clothing and linen are often excluded unless they are under three years’ old, as use will unarguably result in wear and tear.

The other type of home contents insurance is called indemnity cover, which typically takes into consideration the age of a product, such as a hi-fi system. Any depreciation will be deducted and the homeowner reimbursed according to how much the item is worth at the time it suffered damage or was stolen, as opposed to its original purchase value. Indemnity cover is typically referred to as ‘wear and tear’ insurance.

Each homeowner must weigh up their circumstances, homes and possessions as to whether they would greater benefit from opting for new for old or indemnity cover.

[1]ABI