Insurer refuses home insurance £56,000 payout

A Devon couple is claiming to have been mis-sold insurance after being told they can't claim for damage caused by tenants.

According to the Daily Telegraph, their tenants - who appear to have been operating a cannabis farm within the property - caused £56,000 of damage, which Saga is refusing to cover.

After Richard Meryon retired from the Royal Navy, he and his wife Rosalind decided in 2009 to move to Jerusalem to volunteer with a Christian charity. They let out the house to a local couple, and two months later reinsured the house with Saga, which had been their insurer for around ten years. Mr Meryon says he told the company that the house was now let out, and Saga sold him a contents policy underwritten by Allianz.

Two years later, though, one of the tenants lost his job, and the couple stopped paying the rent. The couple flew back to inspect the house - and found that the tenants had boarded themselves in and scattered furniture and rubbish across the garden.

Five months later, the tenants were evicted. But the Meryons found that the house had been badly damaged by water and heat - probably the sign that a cannabis factory had been operating inside.

"Our precious home had been completely trashed," Mr Meryon told the Telegraph. "We discovered that the tenants had likely been growing cannabis in the house, which caused the severe condensation and damp problems. We contacted the local police who told us it was an issue for our insurers."

However, Allianz refused to pay out, citing small print that excluded any loss or damage caused by persons lawfully in the home, or malicious damage by tenants. And that decision weas upheld by the financial ombudsman.

"Saga was aware that this property was being rented out and yet the policy it sold me was completely unsuitable for insuring a tenanted property," claims Mr Meryon.

"Saga, to which I expressly stated that the property would be tenanted while I was working overseas, either knowingly sold me an inappropriate policy or itself did not read the fine print in the Allianz cover but has no blame attributed to it."

The row shows the importance of reading the small print in any agreement - although this is often easier said than done. Earlier this year, consumer website Fairer Finance found that the small print in some insurance policies ran to as much as 30,000 words - longer than George Orwell's Animal Farm.

Insurance broker Policy Expert highlights some of the more important aspects to check:

• Is the buildings insurance rebuilding cost figure accurate? Don't forget outbuildings, etc.
• And does the maximum claim limit for your contents insurance really cover everything you own?
• Are valuable items excluded? Check the single item claim limit on your policy.
• Are you happy with the excess?
• Has anything changed? You may not be covered if you forget to tell your insurer about home extensions, taking in lodgers or even having children.
• Do you understand the phrase 'accidental damage'? Contrary to what many people think, it refers to such things as storms and floods - not, for example, dropping a television.

Read more about home insurance on AOL Money:
Britain's most bizarre home insurance claims
Insurance firms are fair - watchdog
Why your home insurance claim will be rejected