Forced to change buildings insurance

TommyLamb

Hi all,

This is my first post but I was so apaled by the situation I felt the need to post and hope that you guys could give me some advice.

A month or two ago I recieved a letter informing me that the company who previously owned the land my house is on, it's a 999 year lease hold, has been sold to another company. They're called the Compton Group.

A few weeks later they sent us another letter saying that due to the terms of the lease that they had the right to make us change our buildings insurance to their preferred supplier, Zurich. We currently insure our buildings and contents with Natwest, as we bank with them. Now today I dug out the lease and this is what is says....

"And also will insure and at all times hereafter keep insured the buildings upon the said plot of land hereby demised to the amount of four-fifths of the value thereof in an insurance office of repute to be approved by the Vendor"

So as I read it, though I hope I'm wrong, they can decide who we insure the bulding with.

Surely this is just a money making enterprise! They must get a kick back from Zurich for each policy that they send their way.

So please people! Is their any way, in your opinion, that I could be wrong and not change my insurance? Or do I just have to take a slap in the face from the big man and be forced into some thing I don't want to do and may cost me more money?

Thanks in advance,

Tommy.

McKneff

but it also may cost you less money, have you thought of that.

TommyLamb

Yeah I thought that but we get a discount with Natwest as we bank with them and insure not only the building but the contents as well and that gives us a further discount. Also I don't like being told what to do.

McKneff

i suppose you could put it that way. It does say that they have to approve of a reputable company. You could write to them to say you have your present insurance with Natwest and that you believe that they are an 'insurance offfce of repute' and ask for their 'approval'

McKneff

sorry out posts crossed, i know where youre coming from, i dont like being told what to do either. It's just arrogance that they think they can walk all over people and expect no revolt

Incisor

TommyLamb wrote: »

... A month or two ago I recieved a letter informing me that the company who previously owned the land my house is on, it's a 999 year lease hold, has been sold to another company. They're called the Compton Group.

A few weeks later they sent us another letter saying that due to the terms of the lease that they had the right to make us change our buildings insurance to their preferred supplier, Zurich. We currently insure our buildings and contents with Natwest, as we bank with them. Now today I dug out the lease and this is what is says....

"And also will insure and at all times hereafter keep insured the buildings upon the said plot of land hereby demised to the amount of four-fifths of the value thereof in an insurance office of repute to be approved by the Vendor"

So as I read it, though I hope I'm wrong, they can decide who we insure the bulding with.

Surely this is just a money making enterprise! They must get a kick back from Zurich for each policy that they send their way. ...

Hi Tommy. As I read the lease condition, you choose who you are insured with, and they approve or not. It seems to me that the only grounds they have for refusing are that your choice of insurer is not 'an office of repute'.

So, I think that they might be getting a kick back and I think that they are taking a liberty with the terms of the lease. The reason for the clause is to protect their interests in the property - the insurance is subject to their approval, which means that you get to make the choice in the first place. If it was their choice the wording would be something like: "And also will insure and at all times hereafter keep insured the buildings upon the said plot of land hereby demised to the amount of four-fifths of the value thereof in an insurance office of repute to be specified by the Vendor"

As far as I can see, if you provide insurance with 'an office of repute', then they can reject your choice, but they cannot enforce their own. In your position, I would tell them who the insurance is with and that I intended to stay with that company and request their approval. Now, if they didn't accept that, I would ask the reason. The only acceptable reason is that your choice is not 'an office of repute'. Any other reason is unacceptable. Now, let's see whether they will declare NatWest not to be an office of repute.

I don't doubt that they may well play a very slippery game here, so do keep us updated.

[IANAL etc]

Tozer

I think Incisor is broadly right. However, there is no obligation for the lessor to act reasonably in exercising their approval.

What would have been great is if the provision stated - "such approval not to be unreasonably withheld or delayed".

May be worth looking through the lease to see if there is a general "reasonableness" provision although I doubt it as these things are very lessor-biased.

Incisor

Tozer wrote: »

I think Incisor is broadly right. However, there is no obligation for the lessor to act reasonably in exercising their approval.

What would have been great is if the provision stated - "such approval not to be unreasonably withheld or delayed".

May be worth looking through the lease to see if there is a general "reasonableness" provision although I doubt it as these things are very lessor-biased.

I'll agree, the lack of a requirement for reasonableness makes it a bit more difficult, but I think that if the OP gets say 6 reputable insurance offices rejected, then unreasonableness becomes more demonstrable. If the application of the clause can be shown to be unreasonable, it might be overturned, even if there is no explicit requirement for it to be reasonable. But, given that the clause specifies the essential quality of the insurer as being 'repute', it is far from an open ended permission for the freeholder to specify the single company.

Ultimately, if it were to go to court, any deal with Zurich would presumably be open to discovery????

Ian_W

I think they're trying it on!!
[FONT=Verdana,arial,Helvetica] Insurance through the landlord's nominated or approved insurer
Some leases, usually of houses, require the leaseholder to insure the property with an insurer nominated or approved by the landlord. Under provisions in the Commonhold and Leasehold Reform Act 2002 the leaseholder of a house is entitled to place the insurance with his own choice of insurer, as long as he gives notice to the landlord and complies with certain requirements relating to the cover arranged. [/FONT]
[FONT=Verdana,arial,Helvetica]The insurance arranged by the leaseholder must: [/FONT]

• [FONT=Verdana,arial,Helvetica][/FONT][FONT=Verdana,arial,Helvetica]
  
• be with an 'authorised insurer', which means an insurer operating within the requirements of the Financial Services and Markets Act 2000;
• cover the interests of both the leaseholder and the landlord;
• provide cover to a sum not less than the amount required under the lease;
• cover all the risks which the lease requires be covered by insurance.
• [FONT=Verdana,arial,Helvetica]As long as these conditions are met, the leaseholder cannot be required to insure through the landlord's nominee.[/FONT][/FONT]

[FONT=Verdana,arial,Helvetica]From the LEASEHOLD ADVISORY SERVICE website.

[/FONT][FONT=Verdana,arial,Helvetica]If your household policy has legal expenses cover I would contact them or the LAS for advice.[/FONT]
[FONT=Verdana,arial,Helvetica]
HTH.[/FONT]

TommyLamb

Thanks for all your advice guys. It's all gobbledegook to me. But with your [FONT=&quot]guidance I think I may well have a chance. I did forget to mention that I have spoken to several people on my street who have all received the same letter. One of them being the elderly couple who live next door to me. He's quite poorly and she's got enough on her plate looking after him. She's quite distressed about it as they insure with SAGA who give them a very good price and they can ill afford large premiums. I'll draft then send a letter today and let you all know how I get on. If successful I'll tell the neighbours and we can all fob them off.

Thanks again.[/FONT]

stugib

If it's any help, I'm pretty sure mortgage companies have similarly worded clauses in mortgage agreements, saying they must approve of who you're insured with.

In practice, I've never had a problem - most mainstream insurers seem to have the standard standard risks covered, which is all they seem to be bothered about.

Don't just accept it, put the ball in their court and make them tell you why Natwest isn't acceptable.