Buildings Insurance, rip-off by freeholder?

Gez_2

Hello all.


I live in a leasehold maisonette. Our freeholder owns a large selection of similar properties, about 30 I think. Each year, we get a bill sent to us for the years buildings insurance. Last year it was £322.

This seems ludicrous - our content insurance provider has quoted around £100. I've asked the freeholder for proof of the costs, and they sent a schedule from AXA which confirmed the costs. But there's no need for it to be this high, if we changed provider, surely.


Is there anything I can do? They obviously have a policy which covers the whole lot of properties, and divide it amongst us. Surely we should have a say in it, so that we can find the best deal?

Any advice appreciated!

vikingaero

Insurance for flats and buildings owned by a freeholder is notoriously expensive. For instance I insure the buildings part of my house for £100ish and the contents and other cover bumps that up by £200ish.

Unfortunately it depends on your lease. If your lease says that the freeholder has to insure it then unless you come to an agreement you cannot insure your portion separately.

Shared ownership property is rarely as well maintained or looked after than a normal private house. That's why the risk is greater.

happyshopper

I am in the same boat and am considering organising my own buildings insurance. I'm pretty sure that it's do-able, as I found this on the Leasehold Advisory Service page on service charges:


http://www.lease-advice.org.uk/scgrmain.htm


Insurance through the landlord's nominated or approved insurer
Some leases, usually of houses, require the leaseholder to insure the property with an insurer nominated or approved by the landlord. Under provisions in the Commonhold and Leasehold Reform Act 2002 the leaseholder of a house is entitled to place the insurance with his own choice of insurer, as long as he gives notice to the landlord and complies with certain requirements relating to the cover arranged.
The insurance arranged by the leaseholder must:

• be with an 'authorised insurer', which means an insurer operating within the requirements of the Financial Services and Markets Act 2000;
• cover the interests of both the leaseholder and the landlord;
• provide cover to a sum not less than the amount required under the lease;
• cover all the risks which the lease requires be covered by insurance.

As long as these conditions are met, the leaseholder cannot be required to insure through the landlord's nominee.
He may therefore arrange his own insurance, but must serve a Notice of Cover on the landlord no later than 14 days after having placed the insurance (or within 14 days of any request by the landlord). The notice must be in the prescribed form and must specify:

• the name of the insurer;
• the risks covered by the policy;
• the amount and period of the cover;
• the address of the house insured;
• the registered office of the authorised insurer;
• the number of the insurance policy;
• the frequency that premiums are payable;
• the amount of any excess payable under the policy and what the excess applies to;
• whether the policy has been renewed (and the date);
• a statement that the leaseholder is satisfied that the policy covers their interests;
• a statement that the leaseholder has no reason to believe that the policy does not cover the interests of the landlord.

The prescribed form and contents of the Notice of Cover are set out in SI 2004/3097 and 2005/177, in relation to England, and SI 2005/1534, in relation to Wales.

Hope that's of some use,

hs

continualdiamond

WOW, that insurance is a lot. I live in a 2 bedroom flat and my buildings insurance was £154. I've lived here for a year and my next door neighbour told me when i moved in that everyone used to be responsible for own insurance, but then it all changed to the freeholder doing it all.

Gez_2

Happyshopper - wow, that's incredibly useful - good find, and thanks for sharing the info.

That certainly looks doable, though I'm not sure how much of an argument my freeholder will put up. If it's done by the book, I presume there's not a lot they can argue about?

The insurance is due for renewal at the end of february. I'm thinking of writing a letter to them now, to let them know that we are thinking of arranging it ourselves, and that in accordance to the Act we will forward all necessary information nearer the time.

Do you think that sounds sensible?

courtjester

Check to see if the freeholder's policy covers "All Risks" on the building. This makes the cover much more expensive and, in my view, is unnecessary. The less expensive 'Standard Perils' version will cover all the major disasters like flood, fire, storm etc.

Apart from the much bigger premium, all you get with all risks is cover for dogs chewing the building or minor damages which don't need insurance.

We changed our freehold building cover from AR to standard and saved almost 30%.