Block of Flats Buildings Insurance - Massive increase!

ClaireBear83Sx

I've just received the invoice from my Managing Agents which includes my share of the Buildings Insurance to be paid by me.


Imagine my shock when I realised it has gone up just over £136 for the year! That's just my share and there's 96 flats in our block (of varying sizes and paying various amounts!). I've spoken to one of the other owner/occupiers and they have spoken to the Managing Agents who advised that the 27% increase in the Buildings Insurance is due to the 27% increase in the sale value of the flats.


I have spoken to an independent insurance company who have advised that the insurance is based on the value of rebuilding the block and is nothing to do with the sale value of the flats and that the only reasons for an increase would be the 0.5% increase in IPT and if the flood risk etc was increased for the land the block is on (which it hasn't!).


Has anyone experienced anything like this before and/or had to argue with the Managing Agents about the price increase? Can you please advise on the best way to do this.


Any help would be greatly appreciated.


TIA

rs65

ClaireBear83Sx wrote: »

I've spoken to one of the other owner/occupiers and they have spoken to the Managing Agents who advised that the 27% increase in the Buildings Insurance is due to the 27% increase in the sale value of the flats.

Clearly the managing agent doesn't know what they are talking about. The main factor will be the rebuild cost not the sale cost.

ClaireBear83Sx wrote: »

I have spoken to an independent insurance company who have advised that the insurance is based on the value of rebuilding the block and is nothing to do with the sale value of the flats and that the only reasons for an increase would be the 0.5% increase in IPT and if the flood risk etc was increased for the land the block is on (which it hasn't!).
Tax has made a small increase but it is wrong for that insurer to suggest tax should be the only factor. An insurer can change their prices for any reason they want. Claims history for one.

Tax has made a small increase but it is wrong for that insurer to suggest tax should be the only factor. An insurer can change their prices for any reason they want. Claims history for one.

Ask the managing agent again. Also ask if they have sought alternatives.

ClaireBear83Sx

So I have finally had a response from the Management Company (after threatening them with the LVT for ignoring me for over 21 days!) and they have advised the following:


1. Sums Insured – We understand that in line with your responsibilities as Freeholder and in


conjunction with your obligations to your mortgagee you have conducted a tri-annual reinstatement


cost assessment via a 3rd Party (IPS Ltd). They have subsequently advised of the new buildings


sums insured for which to base the premium calculations. The figures provided by IPS Ltd identified


that the properties were underinsured by circa 30%. We have therefore insured for the increased


values as underinsurance would leave you with a significant shortfall in the event of a claim and


therefore unable to rebuild




So basically what they're saying is that they have under insured the block for the past 3 years and now they want all the money up front!


Can they legally do that?!

mattk_180

Doesn't sound like they're charging you for the last 3 years.


It may well have been underinsured for a period (unlikely to be the whole 3 years) but it just seems to me like 3 years ago it was valued at X and the premium was Y, and now, in line with their 3 year review it is now valued at X+30% and subsequently the premium is now Y+30% and thus your portion has gone up accordingly.


You can complain and see if they are willing to try and find an alternative but I don't think there's anything they've "legally" done wrong.

ClaireBear83Sx

I agree, instead of charging the increase each year, they've just under insured and then dumped a massive 27% increase on us this year.


I think our main concern is that if this happens again (i.e. they under insure us for a preiod of time) and we need to claim, the insurance will not cover the full amount of the claim and therefore who would be responsible for the shortfall?! Us or the freeholders for not ensuring the property is properly insured?

Also, we believe that a 10% increase per year in the cost to rebuild the property is excessive. We understand that rental costs have gone up (average 3.5% per year) and the rvt has gone up .5% last year so that accounts for 4% - add another 1 maybe 2% absolute max for increase in materials etc so we're up to 6% max with 4% completely unaccounted for.


Plus, they haven't got any other quotes etc to ensure we're getting the best rate. A few of us have complained, it took me threatening them with the LVT to get a response from them (funnily enough!) and we know they're only in this for the money. I used to work for a Managing Agents and they weren't the best, but these are just crooks!


We'd just like to know if we have any leg to stand on...we know we have to pay buildings insurance, but we want it to be fair.

paddyandstumpy

How can you compare rental prices up 3% to labour and building materials which has increased substantially more?

Yes you were 'undercharged' as you were underinsured.

Now your insurance is based on the correct level the premiums will be reflective of the increased risk.