Berkeley Alexander alerts brokers to impact of new Energy Act

20 March 2018

20th March 2018: General insurance provider, Berkeley Alexander, alerts brokers to the impact of the Energy Act on property owners and their liability.

According to research by HSB Engineering, less than 20% of UK brokers are aware of the Energy Act’s impact on their property owner clients, who could be liable for fines of up to £150,000 for non-compliance. The new regulation applies to both residential and commercial property rented out in the private rented sector and comes into force from 1st April 2018 for new tenants and for all existing tenancies by April 2020.

The new Minimum Energy Efficiency Standards (MEES) requires Property Owners to meet the MEES grade E as a minimum on their energy performance certificate (EPC). Those who cannot meet this standard, or do not have a valid EPC, could lose significant amounts of rental income and non-compliance could also lead to hefty fines and civil liability claims.

Geoff Hall, Managing Director, Berkeley Alexander explains the general insurance implications: “Whilst no insurance will cover the cost of fines from non-compliance, a good Management Liability Policy will cover legal and investigation costs incurred as a result of action brought by a regulator – it would help to defend an action and also cover civil damages awarded against the client, which would not be covered under a standard Property Owner’s buildings policy.

“Clearly being prepared for the Act and meeting the new obligations is ideal, but there will always be those clients who, for whatever reason, fail to meet the standard. Brokers have an opportunity to make sure their clients are aware of their obligations under the new Act and advise them on suitable insurance cover to protect them if the worst should happen.”

Some Property Owners policies provide an optional extension to cover Management Liability but it’s not common as standard and so brokers need to check policies and advise accordingly. It can also be purchased separately as a stand-alone policy if needed.