Building Insurance - quotes too cheap?

siranio

Hi - I'm new to the forum.

We are joint freeholders of a block of 3 Victorian flats and our renewal has again risen substantially to £1200 from £800 (London). With RSA for as many years as we can remember.

I called two seperate specialist brokers, and they have come back with:

£460 AVIVA
£560 ZURICH

Both with lower excesses.

- Are these too cheap, or are the RSA taking us for a ride?
- Is this likely to be an 'introductory' price, then rise?
- Is there anything to be gained from remaining with the existing insurer (loyalty etc in the event of a claim) or is this a myth?

I called the RSA back, and they said the renewal premium they quoted was 'a system error' (yeah), so what confidence in a company with 'system errors'? They implied £460 was no way do-able, but somewhere between £800-1000 may be the 'correct renewal premium'.

My other joint freeholders are a little more traditional, and may be swayed to stay 'loyal' with the RSA...

Misplaced loyalty?

Many thanks for any thoughts..

Sally_A

I don't know is my honest answer; but if you post the current sum insured of the buildings, along with loss of rent sum insured, alternative accomodation, property owners liability indemnity limit etc etc someone on here that deals with this type of policy on a day to day basis may have a better idea of the rates used.

PS. the above assumes you are in a landlord's position, rather than an owner occupier.

However, sums insured would still be a good starting point, construction, and floor structure would also be helpful.

mikey72

Very misplaced loyalty.
See what quote you get from the RSA as a new customer if you can online.
(Probably about half the renewal)

dacouch

It's quite possible, there are a few brokers who have large schemes with Insurers such as Zurich, Aviva and Axa etc. They place large amounts of business with the Insurers, providing the whole book of business performs to certain targets they can offer lower premiums than the rest of the market.

I'm guessing the sum insured is between £250k and £300k for those types of premiums.

These brokers don't tend to offer introductory prices, however if their premiums do go up and you contact them, they will have a lot of leeway in the prices to reduce the renewal premium if you have been claim free

mikey72

dacouch wrote: »

These brokers don't tend to offer introductory prices, however if their premiums do go up and you contact them, they will have a lot of leeway in the prices to reduce the renewal premium if you have been claim free

That's the best way of saying

"it's overpriced, they can halve it and still make a good profit"

I've seen yet.

dacouch

They cherry pick the best business for their scheme so it performs well, commercial property has the best profit margins of all insurance.

The brokers with property scheme often have books of £50m to £100m of premium, with commercial property these amounts open doors with Insurers and you can dictate your own terms with Insurers. If they don't play ball they just shift it to another Insurer who will. Their commission on these could be upto circa 42.5% as opposed to typically 10% on motor insurance so they have the scope to discount.

Commercial Property business tends to renew with the same insurer each year as they value service and cover and it can cause hassle to change so it's good business as the claims are far more predictable than motor insurance / liability led business and you don't have the three year tail of injury claims you get on motor / liability so once the policy has run it's course the Insurers can shift their capital on

siranio

Thanks for all the replies..

We are joint freeholders, and each occupy a flat within the 'block' leasehold. The sum insured is 380k with the usual 1m liability and no common parts contents.. £100 excess (as opposed to the RSA £250 which they raised it to when I last 'negotiated' our premium down..

Interestingly, RSA have now 'managed' to quote us £909 and a reduced excess..

My co-freeholders are perhaps more 'traditional' and think a long term insurer are more likely to pay up in the event of a big claim. I see it more like car insurance - the company is under contract under the circumstances and needs to pay up or not depending on a case by case basis.. Whether you've been with them for 1 year or 20..

dogbot

i think their loyalty is missplaced - any insurer will assess a claim carefuly, there should not be an issue if you change insurers or not if a claim is valid. It is not quite the same as car insurance as the products are not comodotised in the way car insurance now is. That said, the only reason for sticking with the current insurer in this case would be:
a) cover is much better
b) there is a history of subsidence or flood

You can check the cover but sounds like you have and it is similar. You will know about subs or not.

Personaly, I would go with Zurich over Aviva as I think Aviva are more likley to suffer from the 'too big to care' syndrome at times (though Zurich isn't a small company), but it is up to you and your joint freeholders. Why not put the saving towards a fresh coat of paint or sorting out a dodgy roof tile/bit of pointing?

magpiecottage

Provided you are getting like for like cover (and, as always, have the full rebuilding cost) there should not be a problem taking a lower price.

As the policy will, strictly, be owned by the management company, it is corporate business. This will mean that you cannot take a complaint to the Financial Ombudsman Service if its turnover exceeds £1 million per annum. Somehow, though, I cannot see that a problem for a building with just three flats!