Property has been sublet - insurer has severely restricted insurance

Other

I reported to my insurer for my Landlord's insurance policy that my tenant has moved out, having fraudulently sublet my house. The matter has been reported to the police and I have been trying to ascertain whether I am legally free to contract directly with the new occupant for the tenancy. Now my broker says:

'They (my insurer) have advised they will restrict cover to Fire, Lightning, Earthquake, Aircraft and Subsidence and they have applied the below endorsement to reflect this:

036 - RESTRICTED PERILS CLAUSE 2 (RENEWALS- FLEEA WITH SUBSIDENCE)

IT IS HEREBY NOTED AND AGREED THAT THE PREMISES SPECIFIED IN THE SCHEDULE ARE COVERED BY THE FOLLOWING PERILS ONLY: A) FIRE, LIGHTNING, EXPLOSION OR EARTHQUAKE, B) AIRCRAFT AND OTHER AERIAL DEVICES OR ARTICLES DROPPED THEREFROM. C) SUBSIDENCE SHOULD THE SITUATION THAT GAVE RISE TO THIS RESTRICTION CHANGE YOU SHOULD NOTIFY US IMMEDIATELY TO ENABLE US TO REVIEW THE TERMS OF THE POLICY. FAILURE TO DO SO WILL RESULT IN THE CONTINUED APPLICATION OF THIS CLAUSE REGARDLESS OF WHETHER THE SITUATION THAT GAVE RISE TO THIS RESTRICTION HAS BEEN RECTIFIED.'

Are they allowed to do this? They said it's because they don't allow subletting. Neither do I and it's not me that's done it but my tenant. I thought they were supposed to insure me against anything my tenant does, including illegal activity (which this is) and yet now it seems they can just change my policy in this way?