Buildings Insurance - should I take the Indemnity?

BlaEm

Hi all, just looking for some opinions / advice.

I am about to complete on my purchase of a leasehold flat - a purpose built maisonette. The vendor is the freeholder, and also owns and rents out the other flat.

It's been a complicated purchase for a number of reasons, one being that the actual lease specifies that the leaseholder is responsible for buildings insurance; however, the seller has insurance in place for both buildings already.

As I see it I have a few options.
1) Accept a proportion of the insurance already in place as part of my service charge, at least for the current year (policy taken out in October).

Q: The current policy, whilst providing adequate cover in my and my solicitor's opinion, is an Owner & Freeholder policy in the name of the vendors, which includes some Landlord cover.
Now ownership of one of the leaseholds has changed, is there a risk that the policy would be invalidated in the event of a claim?

The Vendor and their solicitors have previously insisted the cover is sufficient and the clause in the lease is irrelevant.

2) Take out my own Building Insurance policy.

Q: Again, I suspect that duplicating insurance will cause more trouble than good - both insurance companies would surely insist that liability for any claim lies with the other (or neither)?

3) Purchase the Contingent Building Insurance cover (£288) offered by my solicitor.

I already know that I will have to meet the cost of this and in theory I don't mind paying, but don't want to pay to fix a problem which isn't really there.

Also: I know this should have been settled prior to exchange, however as far as I was aware my solicitor and lender were satisfied with the cover; it's only today that the vendor's solicitors have asked if I'll be taking out my own insurance or paying an apportionment that I've had concerns, especially as my solicitor has told me today that the "The insurance situation is not ideal" and "looks messy"!! :mad:

Thanks in advance.

BlaEm

Anyone had any experience of this?

G_M

BlaEm wrote: »

... The vendor is the freeholder, and also owns and rents out the other flat.

... the actual lease specifies that the leaseholder is responsible for buildings insurance;
You mean the lease you are buying makes you responsible for insuring the entire building? Or you have to insure just the flat? Or you must pay 1/2 the cost of insuring the building? Or you must insure the building and can recoup half the cost from the other leaseholder?

Or what?

however, the seller has insurance in place for both buildings already.
Do you know if this is in his capacity as leaseholder for the flat he is selling? Or freeholder?

Either way, if the building is insured (and you have evidence) then why worry? If /when you receive a bill for insurance, deal with it then.
Or when the insurance comes up for renewal.

As I see it I have a few options.
1) Accept a proportion of the insurance already in place as part of my service charge, at least for the current year (policy taken out in October).
Up to the freeholder. He'll let you know in due course. Or perhaps not, in which case just be grateful for free insurance.

Q: The current policy, whilst providing adequate cover in my and my solicitor's opinion, is an Owner & Freeholder policy in the name of the vendors, which includes some Landlord cover.
Well, he's the freeholder. What's the problem,?

Now ownership of one of the leaseholds has changed, is there a risk that the policy would be invalidated in the event of a claim?
Don't see why. But if in doubt, ask an insurance broker and/or post on the insurance forum, but with FULL details of
a) the lease wording and
b) the policy

The Vendor and their solicitors have previously insisted the cover is sufficient and the clause in the lease is irrelevant.
So relax.

2) Take out my own Building Insurance policy.
a) seems like a waste of money and
b) in the event of a claim, the 2 insurers will bicker over which must pay - and either will!

Q: Again, I suspect that duplicating insurance will cause more trouble than good - both insurance companies would surely insist that liability for any claim lies with the other (or neither)?
Yup

3) Purchase the Contingent Building Insurance cover (£288) offered by my solicitor.
and give the solicitor his commission.....

I already know that I will have to meet the cost of this and in theory I don't mind paying, but don't want to pay to fix a problem which isn't really there.
Relax

Also: I know this should have been settled prior to exchange, however as far as I was aware my solicitor and lender were satisfied with the cover; it's only today that the vendor's solicitors have asked if I'll be taking out my own insurance or paying an apportionment that I've had concerns, especially as my solicitor has told me today that the "The insurance situation is not ideal" and "looks messy"!! :mad:

Thanks in advance.

Ah! well, if you've been asked for an apportionment, provided the apportionment is fair, what's the problem?

GTG

If you bought this property with a mortgage your solicitor will have also been acting on behalf of your lender to protect their interest. Part of your conveyancing fees goes to pay towards their work in this respect. A solicitor has a legal duty to the mortgage lender to ensure that adequate insurance is in place before you their client becomes the legal owner i.e. on exchange of contracts or sometimes it can be on completion.

I cannot see your lender been best pleased about this situation. I would inform them and let their solicitor take it up with your solicitor. If they have not acted with reasonable care and skill then it will be up to them to sort it out. This may mean varying the leases to accommodate for a shared block policy arrangement suitable for all concerned i.e. both landlord and leaseholders.

G_M

I imagine this is resolved one way or another by now. .........

GTG

You would have thought the OP would have the courtesy to have acknowledged your reply, even if he thought it was $hite. Which of course it most definitely was not.