Homeowners risk losing thousands with quarter of heat pumps not covered by insurance

Heat pump
Heat pump

Heat pump owners face paying thousands for repairs as almost a quarter of emergency home insurance policies do not cover the greener alternative boilers.

Households have been forced to turn to the Financial Ombudsman Service after their insurance coverage refused to pay up for claims on broken air source heat pumps.

It comes as Rishi Sunak, the prime minister, increased the Boiler Upgrade Scheme grants from £6,000 to £7,500 to encourage households to swap gas and oil boilers for heat pumps.

Nearly one quarter, 24pc, of home insurance deals that cover emergencies do not allow households to claim for electrical central heating systems such as heat pumps, financial data analysts Defaqto has found.

True figure could be higher

Experts have warned that the true figure could be higher due to the small print of insurance agreements being unclear as to whether heat pumps are covered.

Angela Pilley, of Defaqto, said: “It is not currently clear in all policy wordings whether ground source heat pumps are classified under the definition of ‘electric heating system,’ so it certainly should not be assumed that this is the case.

“If a consumer is looking to change or upgrade their heating system then it is essential that they check with the home emergency provider to see if cover would be in place for these types of heating systems.”

She added: “We are seeing policy wordings develop to more clearly include or exclude these modern heating systems, but as this is not yet the case with all providers, consumers need to double-check to be certain.”

Customers denied payouts

Claims made to the FOS show that several customers have been denied payouts relating to heat pumps from their insurers.

One case brought to the ombudsman described how a man was forced to replace his broken heat pump with a new boiler in November 2021 at the cost of £9,000 after his insurers refused to pay out.

He was told there would be a 12-month wait for replacement parts for his heat pump, which left his family facing Christmas without heating or hot water.

Deciding his case the FOS said: “It’s our approach – and our approach mirrors the law – that if any term in an insurance contract isn’t clear, it should be interpreted in favour of the policyholder.”

What to watch out for with heat pumps
What to watch out for with heat pumps

It added the policy documents did not make clear that his air source heat pump was not covered by his executive home emergency insurance policy and said it was therefore unfair to turn down the claim.

Another case, also brought in 2021, saw an insurer refund a customer their £49.99 insurance premium for a deal that had “significant policy exclusions” for heat pumps which the customer was not appropriately aware of.

The complainant said an engineer who visited his home to fix a fault for his heat pump left “very swiftly” after saying he was unable to repair it.

He later had his repair claim turned down on the grounds that his policy did not cover for “electricity, any electric related domestic appliances, in addition to pumps and any associated electrics or valves”.

The Ombudsman ruled both customers were entitled to compensation.

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