Share-of-freehold: buildings insurance on price-comparison websites?

Bricks

Trying to work out the most cost effective way to get buildings + contents insurance for a share-of-freehold flat in a building with two flats.

Is it actually possible to do this properly via a comparison website, or am I destined to go to specialist insurers to get the buildings insurance?

If I use one of the price comparison websites to request buildings plus contents insurance, then I have two options:

(a) fill out the forms as if it's for the whole building. So I put the total number of bedrooms for both flats, and so on. But the standard forms don't have any questions that cover the scenario where the building is shared between owners. So my conclusion is that I am not going to be offered the right insurance.

(b) fill out the forms as if it only applies to my flat. Then the presumption is that the "buildings insurance" offered applies only to my flat. And would rely on the other owners getting their own buildings insurance on a similar basis. But then, does any insurance apply to the shared areas? Again, it leaves me worried that the insurance offered will not actually be correct.

So my conclusion is that I can't use one of the regular websites, and need to look for buildings insurance from insurers who deal specifically with this situation. Or am I over-thinking things?

kingstreet

It would be usual for the whole block to be insured for buildings cover taken out by the landlord/freeholder. Contents cover would be arranged by each individual leaseholder.

eddddy

Who does your lease say is responsible for buildings insurance - the leaseholder (/ lessee / tenant) or the freeholder (/ lessor / landlord)?

• If it's the freeholder's responsibility, you and your joint freeholder (neighbour) should be jointly arranging one buildings insurance policy for the whole building.

• If it's the leaseholder's responsibility, it's still worth asking your neighbour if they'll agree to having one buildings insurance policy for the whole building, and go halves on the cost - it will probably be cheaper and simpler. (But your neighbour could refuse.)

Either way, whether you have one buildings insurance policy for the whole building, or 2 separate ones, you'll probably need to talk to a specialist broker - and not use a comparison website. 

Sandtree

You would ordinarily buy buildings insurance for the whole building and then individually buy contents insurance. 

You're not really in the realms of "specialist insurers", even fairly household names do up to a good few million pound block insurance but you are getting into the territory of commercial insurance which is predominately sold via brokers and not comparison sites. Not all brokers have access to the same products so certainly worth contacting a couple at least for pricing.

Where are you in the UK? What is the actual legal arrangement? I know with one flat we looked at in London it was advertised as "share of freehold" but in reality it was a leasehold property with the freeholder being a LTD company but the purchase price included a 4% shareholding in the company along with the other 19 leaseholder that had been involved in the buyout. If you have a similar structure then normally its the LTD that buys the buildings cover.

PaulW922

For something like this, assuming you are trying to insure the whole block - I think a broker or agency is the best way to go. PC websites are only good for straight forward 'normal' types of insurance. My own property is a 'share of the freehold' as Sandtree mentions above and our company, via the managing agent arrange the cover each year via a broker

Bricks

Thanks for comments. Seems clear that comparison website quotes are not the way to go as far as buildings insurance is concerned.

It's a shared freehold - the freeholder is not a company - as I understand it, it's simply an entity that consists of the leaseholders jointly.

What the lease says about insurance is:

"The lessee hereby covenants...Forthwith to insure and at all times during the said term to keep insured under a Comprehensive Policy the demised premises and all buildings erections and fixtures of a insurable nature....with such Insurance company as may be nominated by the Lessor in a sum equal to the full value thereof in the joint names of the Lessor and the Lessee whether in conjunction or not in conjunction with the name or names of any other person or persons legally or beneficially interested in the demised premises..."

I'm not sure exactly how to interpret that - does it imply that each flat can be insured individually, but should be in the joint names of the "lessee" and "lessor"?

Does "demised premises" mean the flat covered by the leasehold only, rather than the building in its entirety?

Because if so, it would seem that following the leases strictly could end up with each flat being covered but not the common parts.

The lease doesn't seem to say anything about the responsibility of the "lessor" to insure anything.

Either way, I will be looking to get buildings insurance for the whole block, in the joint names of each flat owner (which is how we have done it in the past).

Sandtree

Who does the lease say is the lessor?
The demised premises is the areas covered by the lease - ie excluding common areas and other lessee's areas. The clause however says "demise premises AND all buildings erections..."  unfortunately leases are written in archaic style of legal language (I deal with corporate contracts and you never get this kind of stuff unless dealing with the USA who still use this style too) and are really difficult to interpret.

If you say you and the other lessee are a partnership and together the lessor then the contract itself is fairly pointless anyway as you won't be seeking to terminate the lease for the lessee having not fulfilled their obligations. So you just need to agree an approach as the lessors.

eddddy

Bricks said:

Because if so, it would seem that following the leases strictly could end up with each flat being covered but not the common parts.

The lease doesn't seem to say anything about the responsibility of the "lessor" to insure anything.

Either way, I will be looking to get buildings insurance for the whole block, in the joint names of each flat owner (which is how we have done it in the past).

Your plan to get a single policy for the whole block is the best option.

The problem would be if one (or more) leaseholders disagrees or refuses to pay. Because it isn't a condition of the lease, you cannot force them to pay their share.

If there really is no provision for insuring the common parts in the lease, that might be regarded as a defective lease, which could cause problems when you decide to sell. Ideally you should all agree to change your leases - ideally to make the freeholder / lessor responsible for insuring. But you'll have to pay a solicitor's fees to get that done.

Again, the problem is that you'll need to get all leaseholders to agree. Some leaseholders may be disinterested and/or want to avoid paying their share of the solicitor's fee.

Bricks

Sandtree said:

Who does the lease say is the lessor?

Well, the original lease from the 1970s names a single person, but ownership has changed several times since then. We did get the leases altered a few years ago, mainly to extend the lease on both flats to 999 years (and clarify about the extent of each demise after an extension was built). So there is a "deed of surrender and lease" from that point, and under "parties to the lease" it names me and the other owner as the "landlord" and me as the "tenant".

Luckily the other owner is happy to insure jointly so the solution seems fairly simple for now.