Insurance for blocks of flats is another sector of the insurance market, where there can be a great deal of confusion as to who is responsible for insuring the structure and on what basis. If you are phoning around or searching the internet for quotations, you will soon discover that not all insurance companies are keen to insure either individual flats, or blocks as a whole. However, if you contact a company that specialise in this type of insurance, you should easily be able to obtain cover and the perils covered will be fairly similar to those found under a standard home insurance policy. If you are buying a flat in a block, your mortgage provider will want confirmation that the policy provided satisfies the conditions set down in the council for mortgage lenders handbook. Unless the policy you have been offered has some particular exclusion such as excluding subsidence or flooding, you will find that most policies provide adequate cover. Before you accept insurance on a block of flats, you should be provided with a Keyfacts document, this will help you make an informed decision as to the suitability of an insurance contact.
Blocks of Flats, can be constructed by various methods. Purpose built blocks are just that, designed and built to be a residential block of flats, most are built of brick and often will have a concrete frame, to certain insurance companies, these are more appealing as the concrete frame is often considered to help minimise losses in the event of a fire. Roofs on purpose built blocks can be pitched , roofed with slate or tile, but sometimes, as is often the case with bigger blocks, are entirely flat.
Conversions, tend to be older style houses that have been split in to self contained units. Large dwelling houses lend themselves quite favourably to conversion and certainly they have proved popular and cost effective in major cities where space is at a premium. The process of converting a house is quite straight forward, electrics have to be isolated, separate plumbing installed and a certain amount of insulation fitted to the building. The number of flats in a conversion tends to be governed by the size of the original building and the ability to extend the property. Whilst it is not unknown for a purpose built block to consist of 50 flats, conversions seldom have more that 10 individual units.
In recent years, converting former industrial premises to blocks of flats has proved quite popular, particularly in cities where demand is greater, there are now many fine old industrial factories, former hospitals and even commercial premises that have been converted in to residential uses. Most insurance companies who provide quotations for blocks of flats are happy to quote on converted industrial premises, however the construction of the building will be important in governing the price and acceptability.
When you buy a Flat, you normally purchase it on a leasehold basis, that is to say you purchase the right to occupy your portion of the Building for a set number of years, 99 & 125 years are typical terms although periods of up to 999 years are sometimes offered. Buying a leasehold does not give you ownership of the building or the land on which the property stands, these remain with the freeholder.
The Freeholder of the property should insure all of the Building and then charge each flat a portion of the premium sometimes dependant on the floor area. The bill for building insurance is often delivered at the same time as your ground rent and service charge. This scenario is the most typical, although in Scotland the freehold laws are different and it is common for the individual owner of a flat in a block to make their own insurance arrangements. This arrangement of insurance by the freeholder causes a lot of confusion as when you buy a House, it is usually on A Freehold basis and of course you are Free to arrange your own building insurance (If your mortgage lender will allow you of course, they sometimes insist on the fact that you buying your building insurance from them). Buying a communal insurance policy arranged by a Third Party with the costs shared with other flat owners does not always seem appealing. Often, particularly, when the freeholder cannot be contacted, people try to insure just their own portion of the building, whilst this is not impossible to do it certainly cannot be recommended. In the event of a serious claim, matters could become quite protracted with a number of different insurers involved. The situation may become even more complicated if a number of the Flats have no insurance at all. The simplest way is probably to arrange a meeting between all of the Flat Owners and appoint a representative to approach the Freeholder to make sure that adequate insurance is in place .If you manage to purchase the freeholder of your building, you will of course be able to arrange your own insurance and can e make sure you are obtaining the best deal possible. There are several types of insurance available for Blocks of Flats.
Buildings & Contents Insurance
This is the basic policy that almost everyone will buy, the perils covered are fairly similar to those provided by a standard home insurance policy, so you can expect to see a fairly standard set of perils. Some wordings, particularly those written for purpose built blocks of flats, offer additional covers such claims from tracing water leaks and even removal of bees and wasps nests. You will normally be able to choose your own sum insured and increase the basic cover to include Accidental Damage. The contents section of a block of flats insurance policy will only cover communal contents and not content more specifically or appropriately insured elsewhere. Many blocks have stir carpets, curtains or sometimes even paintings and furniture in communal areas and all of these can be covered under the policy. Policies that are written under standard home insurance wordings often include Terrorism free of charge, although biological and chemical contamination cover is excluded. Polices written on a bespoke block of flats insurance basis will usually require you to buy terrorism insurance as an optional extra. Premiums depended of the location the property and need not be expensive. As well as normal buildings insurance cover, you may like to consider...
Directors & Officers Insurance for Committees or Management GroupsManaging your block can be a difficult ( and an unrewarding task ) the majority of people simply do not realise the difficulties . Unfortunately, the law recognises no fundamental difference between people running a residential management company and those running a large company. Directors and Managers can be held personally liable for the financial consequences of their actions and errors relating the managing of their building. So what could go wrong?
Your could be held liable because the value of a co-lessee’s flat had dropped as you have failed in the upkeep of the building or its gardens
You could be held responsible for poor work carried out by contractors.
Directors and Officers liability can help provide protection against these matters and premiums are fairly inexpensive, especially when paid for on a communal basis.
Engineering Insurance - If the building you require insurance on has a lift, you will obliged to effect an engineering insurance policy which will provide for an inspection of the list at the insured building. Passenger lifts are required to be inspected by law and normally this work is carried out by an insurance company. As well as the inspection cover, you can also arranged for Breakdown & Sudden & Unforeseen damage to the lift itself.