Leasehold & buildings insurance

piccalilli82

I'm just in the process of buying a leasehold property and I'm having trouble working out what exactly I need to insure.

The flat is part of a local authority block and the Council own the freehold. I have the documentation relating to the Council's insurance of the building (and all other blocks as part of an overall policy covering all the Council's housing stock) however the policy clearly states that I must buy insurance for the 'demised premises'. I understand I need contents cover for my possessions and I don't need insurance for the whole rebuild cost (as the whole building is not mine to insure) but there seems to be a bit of a grey area on things like internal walls/ceilings/floors/fixtures & fittings (kitchen/bathroom etc) in the flat that I'm not sure how to cover.

Has anyone got any experience with this? I feel like a need 'buildings lite' insurance but I don't know how to go about it!

Spikey1

Hi mate,

Don't worry too much about this Any Buildings cover you purchase will only insure you for the parts of the building which you are responsible for. So you don't need to break it down at this stage.

In the event of a claim the Insurers would request a copy of the lease where they would establish which parts of the damage are your responsibility and which parts are for the Council to worry about.

Nowadays many Buildings policies come with a set sum insured of say £300,000 for example. Everyone gets the same ....so you don't even need to try to work out how much insurance to request.

Best of luck

piccalilli82

So there's no risk of double-insuring? The premiums seem to triple when I select 'buildings' even though I really only want to insure my kitchen/bathroom etc - is there a way to specifically exclude the stuff the freeholder already covers and bring the premium down?

Spikey1

If you were a tenant (and I appreciate that you are not renting) you would just need a Contents policy together with an extension called "Tenants Improvements". This extension would cover any improvement work which you installed after you took occupancy (eg. a better kitchen, a conservatory etc.)

I would imagine that you could get something similar added to your Contents cover to cater for your needs....the situation seems quite similar. It would be better for a broker to help you out here....hopefully someone will chip in with some good advice.

It seems a shame to have to pay a 'standard' price for your Bdgs cover when your 'value at risk' is less than the average property owner.

piccalilli82

Thanks for that - this seems to be just what I was thinking! From speaking to a few friends and colleagues who are leaseholders it sounds like most are probably under-insured with ordinary contents policies and a handful are probably over-insured with full buildings policies!

A view from a broker would be great - I'd assume this is quite a standard situation but there's surprisingly little on the internet (unless I'm missing something here!)

*Scarlett

You can maybe find a local broker here

http://www.biba.org.uk/

piccalilli82

Still haven't managed to pin this down but I've spoken to a broker at Glendinning (01943 876 631) who has found me a policy with Aviva which will cover fitted kitchen etc under 'tenants improvements'. It specifically excludes ceilings and internal walls etc and is only up to 25% of the contents sum insured so it's not quite what I was looking for but it seems to be the best I can find. A solicitor friend has suggested the lease might be defective in requiring this insurance, anyone else got any further figuring this out? I'm sure there must be thousands of leaseholders in a similar position, unless they have better freeholders than Lewisham council!

piccalilli82

I've now got a quote from Ocaso who apparently have a special arrangement with the council to insure just the internal parts of the flat. They've said they don't cover a rebuild value of anything less than £110,000 but that seems too much to me given in a worst-case scenario the council would have to reinstate the building itself, external walls, party walls, roof, windows etc and I would cover the ceilings, plaster, fixtures and fittings etc. the BCIS calculator doesn't cover flats of this age (1935) does anyone know how I can estimate this myself? The quote is significantly higher than the Aviva one and that's without any contents, it feels like the Council are trying to push the responsibility on to individual leaseholders when it would be much cheaper to improve the overall policy - we are paying for it through the service charge anyway!

rs65

Have you had a survey done?

The survey report usually gives a rebuild value.

piccalilli82

The survey came up with a rebuild value of £98,000 but my understanding is that this would be for the total cost of rebuilding my flat including the parts that are shared - unless I've got the wrong end of the stick?

FirstTimer4Me

We live in a leasehold flat, and have done for 20+ years.

You need Contents insurance only, bricks & mortar are the responsibility of the freeholder.