Buildings Insurance When You Live in a Flat

Eustace

I live in a first-floor studio flat in a block of four. I have always had buildings insurance, as a requirement of my mortgage (for a leasehold - the builder is the freeholder). The deeds also state that insurance is required. However an insurance broker has led me to believe that if others in the block do not insure their properties, then my insurance company may not pay out. For example, there could be a fire and there would be insurance money to pay for my rebuild, but not my neighbours' property, on which mine is built.

Determining whether the other residents have insurance is not easy because some rent through a letting agency, who act on behalf of a landlord. The letting agency say they cannot give details because of the data protection act. In any case a resident could lie and say they have insurance when they do not (like some motorists).

I have written to the freeholder to ask if they insure the buildings. Although I cannot be certain without a reply, I do not think this will be the case as there is no maintenance and only peppercorn ground rent.

:question: Does anyone know an answer to this problem, ie how to be sure my insurance company will pay out? Thank you in advance.

kingstreet

A block of flats should be insured by the owner of the freehold of the whole building, using a block policy. When the freeholder disappears, or abdicates this responsibility, there are special products a flat leaseholder can purchase which take care of the problem you describe.

A good broker will advise you on the correct route, should you find the freeholder isn't taking his responsibilities seriously.

kingstreet

Here's a section of an article I found recently when we had an issue over the difference between insuring buildings when a tenant, a lessee and a freeholder;-

When you purchase a flat you normally purchase it on a leasehold basis, that is to say you are buying the right to occupy your Flat for a set number of years. 99, & 125 years are fairly typical terms. You have rights to use the common parts and usually the garden area if there is one. You do not own the building or the land on which it stands. This is owned by the Freeholder of the Building, at the end of your lease term your Flat will return to him or her. The terms of your lease will outline the Freeholders responsibilities, which will usually include; arranging the insurance which is often billed out to you with your services charges.

Often it is difficult to locate the freeholder of the property and individuals resort to arranging their own covers, this is not the advised way to approach the matter and if at all possible, you should seek to group together with the other leaseholders to arrange a common policy. Many leaseholders are now joining together to form management companies with a view to buying the freehold of the building and thus affording them the right to arrange their own insurances. The government introduced legislation in 1993 giving lessees, if they satisfied certain qualifications, the right to buy their freehold of the block and this is now proving to be most popular.

http://www.assetsure.com/blocks-flats-c.htm

Link given for guidance only. No recommendation of firm or products intended.

You appear to be doing the right thing in establishing the freeholder's position and the other flats' insurance arrangements.

Eustace

Thank you for the replies. The builder, who is the freeholder, has told me they do not insure the building, which is why there is not a charge. Their legal department says that building societies need to know insurance is in place in the other properties, so they are 'probably' insured. The problem is that, like me, their mortgages may be paid off and 'probably' isn't the same as definitely.