Contingent Building Indemnity Insurance

HouseBuyer77

Hello,

I'm purchasing a maisonette in a block of 4. It is leasehold and the freeholder does not insure the building. The lease says it is the responsibility of the leaseholders.

This leaves the issue that if you insure your part but your neighbours do not you're in trouble should the building burn down.

A Contingent Building Indemnity Insurance policy has been suggested however the policy requires that full buildings insurance is in force for the entire building at the beginning of the policy and for the policy holder to ensure this remains in force.

So this leaves me with the stupid situation where I'm seeking buildings insurance for the whole building rather than just my part to comply with the indemnity policy. An alternative would be getting copies of the policies in force on the other maisonettes in the building but I don't know how much trouble this would be. Plus from the terms of the policy I'd need to get another copy of the policy every year from the neighbours to ensure they're being renewed. I'm investigating the cost of insuring the whole thing by myself but I don't yet know what that would be.

Has anyone had any experience of this situation or have any advice to offer?

G_M

It's a pain when leases are set uplike this.

Given there are only 4 properties, the best solution is to talk to the other 3 owners and set up a single joint policy. Unless one (or more) of them are idiots this should not be too hard.

And if it turns out they are idiots, do you really want to live there........?

ethank

My contingent building indemnity insurance was like £75 one off fee. Just pay up and forget about it and insure your own flat for buildings and contents going forward.

HouseBuyer77

Just pay up and forget about it and insure your own flat for buildings and contents going forward.

The policy I have seen explicitly states that if you do that the indemnity insurance is invalid. The onus is on you to ensure the entire building is insured at the beginning of the policy and you must make reasonable effort to ensure it remains insured. I suspect your policy is much the same. I did read a couple of different policy wordings I could find online and they all have similar clauses.

On rightmove it looks like one of the other maisonettes in the same block was purchased fairly recently. I'm going to pop round this evening and see if I can get hold of the current owners as I assumed they faced similar issues.

I think I'll end up getting a policy to cover the entire block on my own, it's more than insuring the single property but it's not too awful. Hopefully I'll get the neighbours to agree that a single shared policy is best long term but for now I just want to get the purchase sorted.

HouseBuyer77

Updating this for the benefit of anyone else who comes across the same thing and reads this thread:

The single policy as suggested by G_M does indeed seem to the best thing to do, however as the leesee of a single maisonette you can't simply take out such a policy as you don't have insurable interest in the whole building. One insurance broker I spoke to suggested I could take out a policy in the freeholders name, though this will require a letter from the freeholder authorising me to do it (and possibly authorisation from the 3 other owners as they'd need to be named on the policy also). Another broker suggested a company could be formed of the 4 owners and that company would have insurable interest. In any case it was too much bother to want to deal with as part of the purchase. Though I will definitely chat to my neighbours about it and see if I can get a single policy sorted over the next year sometime.

So an indemnity is the way forward to start with. You need to prove to the indemnity insurer that the building is fully insured though so we had to get hold of the neighbours policies. You're also meant to make sure it remains insured which I guess means getting a new copy of everyone's policy when their renewal rolls around.

I used a broker to get building's insurance for my masionette. As it's a slightly odd situation I preferred the piece of mind from having a broker find a suitable policy rather than just getting something online (this policy has specific wording to cover the situation where the costs are being split amongst the owners, other policies I saw did not). It wasn't the cheapest option but it seemed better than just blindly hoping a standard policy would work out should disaster strike.

Hoploz

How did the seller organise insurance previously?

HouseBuyer77

Just standard buildings insurance on their maisonette. No indemnity as far as I'm aware. My solicitor says that when the seller purchased lenders' had far looser requirements so it just may not have come up as part of the conveyancy process.