Introduction - 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.
Terrorism - 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 Groups.
Managing 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?
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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
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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.
