Building insurance on individual flat

amoulton

Hi, bear with me I'll try not to make this question too long ...

I own the top floor flat of a building converted into two flats. I own 50% of the freehold as does the person downstairs. There is no management agency or third party involved in maintenance of the property.

I have a buildings insurance policy for my flat. The lady downstairs has been advised by her broker that she cannot take out a policy for her individual flat and so has taken out a policy for the whole building and is asking me to pay half the cost.

I have spoken to my insurer to clarify that my cover is valid and that there would not be problems if a claim needed to made that affected both flats. They say as long as there is cover for the downstairs flat too that the whole building is covered and a claim could be made against either policy.

I spoke to the broker in question and told him that I have not had any trouble finding a policy for my individual flat but he states that none of the insurers they use are able to do this and that there could be problems making a claim if it affected both flats.

So HELP, any advise is very welcome
I am now confused. I do not know where to go to validate that my policy is good and valid. The broker has made statement that "insurers are generally unable to insure individual flats" but this contradicts my experience as I have easily found a number of alternate quotes the last two years in a row when i have come to renew my policy.

thanks for any suggestions,
Alexei

dogbot

Both are correct. Your insurer and her broker. In scotland, you insure your flat for buildings, so insurers will do this.

To be honest, you might be better overall by getting together with your neighbour, going to more than one broker and some direct small business insurers (Direct Line for Business, Premierline, AXA...) and qetting quotes for a joint property owners policy to cover the block. You would then arrange your individual contents insruance.



Why? Well I think the broker is correct, it can be a nightmare should there be a claim affecting both flats and two buildings insurers arguing between them. E.G. Your boiler/pipe bursts and floods your flat and her's bellow. If you have one buildings policy you can get one contractor to quote for all the work and one insurer pays for it. It also might be cheaper.

On the other hand, could she try getting a quote from your insurer?

You might benifit from a little advice from your solicitor (whoever did you conveyancing), and working out the best way of putting an arrangement in place with your neighbour about things - some sort of trust or agreement? This would not just be relevant to the insurances, but what about building up a pot of money for joint repairs etc? We looked at some share of freehold places when buying earlier this year and generaly were told by our solicitor/ifa it was usualy to have some sort of agreement in place, each pay a share of the block buildings policy and have a pot of savings for repairs/agreement that each must pay a fair share for common repairs - such as roof etc.

*edit - just saw that she has already taken a policy out!? There was no legal agreement between the two of you so she can't demand you pay, but it is worth looking very closely at the costs involved and getting some more quotes to make sure she got a good deal.

Quentin

Your neighbour cannot insure your flat if she doesn't have an insurable interest in it, and should have discussed this with you before taking the policy.

It sounds like her broker hasn't tried hard enough!

Decline her offer.

amoulton

Dogbot, Quentin - thanks for your replies.
Certainly good advice about an agreement covering common repairs etc and I'll look into doing this.
There is merit to the idea of us having/sharing one policy to cover the whole building, (and I might well go down this route with this or some other policy), but I see no reason to be believe from a legal perspective that my individual cover is not valid (albeit difficulties that could arise).
I dont understand why I can find a plethora of quotes for policies in minutes via the internet and this broker says that it is not commonly possible. He even made a joke that maybe i should come work for them if I find it that easy but tbh I just find this frustrating.
I am willing in principle to share this policy (need to see the details but the cost is competitively low) I am very much inclined to go elsewhere just to find someone who I can trust properly (if that is possible).

dogbot

The problem with your individual policy is - where does your flat's building end and her's begin. If there is a problem with storm damage to the roof, for example... how much get's paid and by who?! As quentin suggests she doesn't have insurable interest in your property but again, neither one nor the other of you owns the building's fabric, you both own all of it equaly (or down whatever lines the freehold is split) (at least, that is share of freehold was explained to me earlier this year!). This does, in truth, mean your individual policy is not really very usefull, unless she also has a policy set up, both insruers are aware of the situation and will work together in a claim...

Just to check, you're not in Scotland are you? The situation there is different, though I don't know how it works!

It does sound like the broker is rubbish, making jokes like that is hardly helpful, nor does it shed a good light on brokers or the industry. Insurance is a complex business, there is a lot of law involved and this is a complex circumstance. It annoys me that they have not taken the time to explain everything to you or her, just joking about trying to make a sale. Who are they?

Personaly, I would get some legal advice asap from your convenyancing solicitor or a good small independent IFA, about the kind of agreement you need to set up. I thought that it was usual for share of freehold properties to have some kind of trust set up with both freeholders having equal rights and share. Each freeholder then has a peppercorn leasehold from themselves, usualy set at 999 years or what have you...

dacouch seems to often have some wise words regards buildings cover on shared freehold properties, so hopefully he will see this and outline the correct in's and outs.

dacouch

For clients in your situation I would generally recommend a block policy eg a Property Owners Policy that covers the entire block. This would normally have both freeholders (Flat Owners) as joint policyholders.

As dogbot has pointed out there can be problems when you have a claim if the flats are insured seperately. You can also sometimes find problems when selling the flat as the solicitor for the buyers may pick up that the flat is not insured under a block policy and recommend / insist one is arranged. This can cause delays in the sale.

With regard to Dogbots comments, I had a client for whom we only covered contents, the flats were insured seperately for buildings cover. She had water pouring into her flat from the flat above (Top flat) which looked to be caused by the storm damaged to the roof. The flat owner was on a very long holiday and was not contactable As they had seperate building cover her Insurers would not do anything to repair the roof. She had to endure a few weeks of water pouring into her flat as we experienced heavy rain in that period until he returned. Once the roof was repaired there were the inevitable arguements between the Insurers.

One of the things that has not been mentioned is the block may have a communal entrance / hall / staircase. This may not be covered if the two flats are insured seperately.

The other advantage of a block policy is you generally have one excess per incident instead of each flat owner paying an excess to their own insurer.

A good property owner policy will also include the costs of alternative accomadation and / or loss of rental income. This can be very helpful if one of the flats is rented out and there is a claim as the landlord is often responsible for rehousing the tenant whilst the property is repaired

ThumperBrighton

I also own a flat and a share of the freehold. By far the safest option is for one policy to cover every flat in the property. Most mortgage companies require this and you should check out whether they allow separate buildings insurance - most do not.

Some companies do specialise in buildings insurance where the property is divided into flats - do a google search for something like "freehold flat buildings insurance" which I did to bring up a list of companies that offer this.

I went with the company called Assetsure dot com. I found them exptremely competitive (a few hundred pounds less than some other quotes).

I hope this helps!
Paul