Block Buildings Insurance Help!

mleonard79

Hi everyone,

While switching mortgages recently I had to get a copy of our buildings insurance policy to prove we have cover for the mortgage. We used to pay for our own buildings insurance seperately but a few years ago someone from the factors came round and talked everyone into agreeing to a block buildings policy instead as he said this would be a better policy for us. We live in an old tenement close of flats and there are 6 houses in our building. I don't know very much about these block policies and was wondering if anyone could tell me if they really are better than normal buildings as from looking at the prices we're paying I feel it is quite expensive.

It is a Norwich Union Policy which costs us £66.37 per quarter (so £22.12 a month) and we pay it through the factor. It insures the building for £926,371 but I'm a bit worried about this as when we got our survey done for the remortgage they put down £220,000 as the cost of rebuilding but if that £926,371 is spread over the 6 houses our share is only £154,395 - does this mean that we are underinsured for our buildings cover?

We have a separate contents policy with Royal Sunalliance which costs us £15.33 per month which means we're paying £37.45 a month or £449.40 a year overall for b & c cover. This seems a really high amount when I do searches online and get quotes. The contents isn't too bad (although from looking at it we're only insured for £20,000 worth of contents and I'm sure they're worth more than that.) I have just done a quote at Tescos as I'd read about the half price offer in martin's tips and it seems there's less than £3 of a difference between taking contents only or taking buildings & contents and they insure your buildings up to £1,000,000 - that would be just for my house!! This can't be right - how can there only be £3 of a difference when I'm paying £22?!

I don't think it's possible to opt out of this block policy but I was just looking for some opinions from those who know more about these things - are we being ripped off or is this a decent price? Also my mum works for Norwich Union - do you think if we have to keep this policy she would be eligible for an employee discount even though its a block policy? Really quite confused by all this. Thanks for any help!

Regards

Michelle

mleonard79

Just bumping this up in case anyone who can help hasn't seen it! Thanks.

mattymoo

Lots of questions there. Will try and answer a few of them.

1) do not go down the route of asking your mum for staff discount. It is a red-tape nightmare. She would need to start a staff agency, the discount will be her commission which she is then free to split with you. However, she also has to jump through hoops re FSA regs / tax man etc that she will simply find it is not worth it.

2) Block of flats / block policies should normally work out cheaper. However like any policy you have to shop around at renewal. The factor or whoever is organising the policy possibly hasn't done this and the NU are probably no longer competetive in your area. This could be for a number of reasons - worsening crime stats or potential for flooding. NU hold very detailed flood maps now (far better than environment agency) and if they think there is the smallest chance of a flood - they will load the premium.

3) Sum insured - as above really, the factor has not reveiwed this. NU have simply gone along with index linking in accordance with RICS figures. However these are subject to local variation and if your property is unusual in terms of materials, awkward access for building works or is of an unusually high standard, the estimated rebuild cost may have fluctuated more. Another factor is the flood of builders to the SE of England leaving some parts of the country short of skilled tradesmen.

4) cheaper premiums. Be aware that many of the internet based systems are looking for standard brick and tile 3 bedroom box type properties to insure. Yours does sound a little unusual and you may find that when you phone to firm up a quote, there will be some reason they cannot proceed with it because it does not fit their criteria.

mleonard79

Hi mattymoo,

Thanks for the detailed response. I'll try to go through your points and give a bit more detail.

1) I think I've not put it clearly enough about the Norwich Union thing. This is my mum's house I'm talking about (I live with her) and she is the NU employee - I assumed it would just be a case of getting a staff discount? She would not be splitting any discount with me, it would solely be for herself but of course if they did discount the policy it would I'm assuming benefit everyone in the close as it's split 6 ways. Everything you describe sounds very complicated though and def not worth the hassle.

2) I thought it should work out cheaper but when I do quotes online I'm finding things like buildings & contents works out £3-5 dearer than just contents - that can't be right can it when we're paying over £20 for buildings alone? What would you say is a regular amount for a block buildings policy of this type?

As you say I don't think the factor's that concerned about the price and shopping around as they're not the ones paying it at the end of the day! However we were on another policy before NU last year and it was even more expensive so they have saved us some money this year! Still seems like we're paying way over the odds. I don't think there's really much we can do about it though as the whole close agreed to it so I don't see a way we could opt out. As for the policy being high due to crime rates etc I seriously doubt that as we are in a nice area. I also can't see there being risk of flooding as we are nowhere near any water at all. So I can't see what could be loading our premiums up so much.

3) Do you think that we're underinsured then? Should we do something about this?

4) This type of housing is the norm here in Glasgow. I'm not sure about the rest of the UK but Glasgow is particularly well known for it's old Victorian/Edwardian red sandstone tenement blocks of buildings. There are very few houses (of course with it being a city!) They have high ceilings and large rooms and are very well built - they've stood the test of time brilliantly and outlasted most flats build after them. The walls are solid stone, the roof pitched and slated and the floors timber according to our survey. It also says there is no evidence of subsidence, heave or landslip and no structural problems whatsoever. They value it at £160,000 (most similar tenement flats go for less but ours is in a particularly nice quiet area overlooking a park so that adds to it.) I just can't, therefore, envisage it being classed as an unusual property but perhaps large insurers down south would maybe not be used to it if it is particular to Glasgow or Scotland. We did have our own buildings insurance before the factor got everyone to agree to a block one and it was a good bit cheaper as far as I'm aware. This does seem a bit of a minefield to find out about but interesting all the same!! Any other help gratefully received! Thanks a lot.

Regards

Michelle

marble

I don't really know how it all works in Scotland (my sister lives in a similar tenemant in Glasgow). Getting contents insurance for just your property shouldn't be a problem. Getting buildings insurance may be a problem however.

The problems come when/if the property suffers from damage which affects everyone. Say, for example, there was subsidence and the whole block started sinking. If all of you have seperate buildings insurance then who pays out? Does your insurance company? If it's the other side of the building sinking then why should they? Should you pay more as you have heavier things in you property (shoe collection etc)? It's every underwriters' worst nightmare!

Most insurance companies won't touch seperate leasehold properties and will only insure them as a block because of this reason.

There is no reason why you are stuck with this one insurance company .. you may have to convince everyone else in the block to change companies though (if you can save enough money!).

£450 a year for buildings and contents seems like quite a high price to me. I know some of these tenement buildings are built with reasonably poor sandstone, so may be quite a big insurance risk. You best bet is to ring a good (and Scottish, as they will know more about this) broker and take their advice. Most high street or local brokers are happy to give free advice if there is the possibility of making a sale!

Al

mleonard79

Hi Marble,

Have only just seen your response. Thanks for that. I can see your point about the problems having separate buildings policies in a tenement could cause and I'm not adverse to having a block policy. I do think it's a good idea but I'm just concerned about the price and the fact it looks like we're underinsured. It would be nice to hear what others in similar properties with block policies are paying and compare!! This may well be the going rate but I just don't know and it does seem very expensive - maybe I should ask on the Scottish board! It does seem a very complicated area to find out about.

As you say getting contents insurance for the property is no problem at all and getting buildings on its own was no problem either before we got this block policy a few years ago so I can't see that it's the type of building causing it to be so high!

I think your idea about talking to a Scottish broker is a good one - where would I find one that deals with this? It may be a silly question but when you say broker do you mean like an IFA that deals with insurances? Thanks for the help.

Regards

Michelle

marble

Hi,

A Scottish broker could be anyone from an IFA to a highstreet broker - just try to find one which has an office nearby (not a call centre). I used to work in Southampton and we had a good knowledge of the local area, why some areas were more expensive than others and also which areas has problems with things like subsidence. We were a national chain, but had offices in most high streets and dealth with all local queries ourselves (I'm careful not to advertise!). Chances are, someone based near you will deal with situations like this every day and be much better than me at giving you advice.



Al

mleonard79

Hi Marble,

Thanks for that. I'll have a look on unbiased.co.uk (I think that's the right website - it lists IFA's) and look for one that specialises in insurance that's based in this area and see what they say. Worth a go!

I posted my query up on the Scotland forum as well just to see if anyone else who lives in Glasgow tenements could help and someone posted this:

I own a flat in a Glasgow tenement with 6 flats built 1866. We have a block insurance policy with Royal Sun Alliance arranged by the factor and it costs £32.78 a year for 2006/07. The flats in the street are a mixture of owner-occupier and tenanted and the factor is the Housing Association that owns the tenanted properties. Don't know who your factor is but they are notorious for their high charges, whereas in my case the Housing Association is a charity and probably non-profit making. I do think I get a very good deal, mind you. I don't know what the level of cover is (could probably find out), but I'm not too concerned as I am sure it will cover the cost of rebuilding as the Housing Association would not want to lose their investment in the properties. I wonder if the cost of the policy premium depends on the size of the "block" covered by the policy. In my case, there will be a lot of properties covered - possibly one side of the street. Is yours just for the six flats in your close? Or maybe my factor has just negotiated a very good deal.

£32 a year is equivalent to one and a half months of cover for us!! Even though I think his deal is extremely good and probably not representative of most people in similar properties it is a bit of an eye-opener. Even taking into account a possible discount for taking out a policy on a large number of properties like his housing association would do there shouldn't be such a massive discrepancy between what he pays and what we pay should there?! It's unbelievable. Thanks again.

Regards

Michelle

SPIKE_2

Hi,

I've just joined this forum, hope I am in the correct thread and someone can help

I recently negotiated an extension for the lease on my flat. I have assumed this would increase the value of my flat and thus wanted to ensure the property has the appropriate level of buildings insurance cover. I obtained a summary of the insurance cover for my flat. It revealed that the cover is for the block ( my flat is 1 of at least 30 ) not individual apartments - this appears to be the norm from reading earlier comments. The summary states the 'sum insured' is greater than the 'declared value' which I believe is how it should be.

My question is how do I go about increasing cover for my own property ?

I suspect this could be very problematic if it's at all possible. I'm not sure how the freeholders determine the values of the properties ( properties are a mixture of studio, 1 and 2-bed flats ). I doubt many in my block have extended their leasehold agreements - it took almost a year to do mine but that's another story !

I also contacted the freeholders themselves to obtain a full copy of the buildings insurance. I was told I could get a copy for £40 which surprised me - is this standard practice to pay ?

I'd be grateful to hear from anyone who has dealt with similar situations.

First time in a chat forum of any kind - hope I have not rambled too much.

Thank you.

dacouch

The length of your lease and the value of your flat have nothing to do with the Building Insurance.

The Building Insurance covers the cost of clearing the land, professionals fees and the cost of rebuilding the property. For instance if the property burnt down the Insurers would not have to buy the land as it already belongs to the freeholders / lease holders and this presents a fair proportion of the cost. In addition the value of properties in most areas is massively higher than the cost of building them hence why so many flats are always being built.

So to summarise you do not need to do anything to the building insurance.

Obviously if you fit an expensive fitted kitchen, bathroom etc to your home you might need to increase the sum insured for your flat.

It would do you no harm to have a read of your policy so you understand what you are covered for and are not covered for. I'm surprised the managing agents are asking a fee to supply you with one. After all you are in effect paying part of the premium.

SPIKE_2

Hi Dacouch,

Many thanks for the information. Very pleased that I do not have to sort this out.

Spike :T