Buildings insurance

Linda2mo

Does anyone know where I stand with getting my own independent quote for building insurance.  I've just bought an upper floor flat in a converted house and had a quote from the management team on behalf of the freeholder. As in past years,  it's an extortionate amount,  including asking both flats for an administration fee.  Surely this is illegal?  
Thanks in advance for any advice. 

Sandtree

As a block of flats you would need to get a quote for block insurance covering the whole property and this will be more expensive than if the whole house was still a single dwelling. If you obtain such a quote and its significantly below what the freeholder is paying you can send it to them for comment as whilst they arent obliged to get the cheapest insurance they are obliged to ensure the premiums are reasonable. 

To facilitate this it would be sensible to ask them for a copy of the current schedule and policy documents to ensure you get a quote with equivalent coverages.

Linda2mo

Hi. It's a converted house,  now consisting of upper and lower flats. Does the same advice apply ?
Thanks 

Sandtree

Linda2mo said:

Hi. It's a converted house,  now consisting of upper and lower flats. Does the same advice apply ?
Thanks 

In principle yes, a small number of landlord insurances claim to be able to cover small blocks of flats but they normally put requirements on the freeholder that their leases wouldn't allow them to fulfill like the freeholder having to do an annual gas safe test in each of the flats. 

This sort of thing is almost exclusively sold via brokers and so speak to a couple of local brokers and let them guide you on what policy type the freeholder needs to cover the two leasehold flats and any common areas.

eddddy

You need to read your lease to find out the insurance arrangements.

The lease is a contractual agreement - you agreed to the terms of the lease when you bought the property.

With a house converted into flats, typically (but not always) the lease says that the freeholder must arrange buildings insurance, and you must pay a share of the premium through the service charge. They can probably add an Admin Fee to the service charge as well.

But the law (The Landlord and Tenant Act 1985) says that service charges - including Buildings Insurance premiums and Admin Fees - must be 'reasonable'.

The law doesn't define 'reasonable'. But...

• Is the Admin Charge specifically for arranging insurance, or for annual management of the building?  If it's specifically for arranging insurance, tribunals seem to have accepted that about £50+vat per hour is a 'reasonable' Admin fee for that type of work.

• Could the freeholder have got equivalent  Buildings Insurance from another provider more cheaply? If so, it's probably not 'reasonable' to buy the more expensive policy.

Edit to add...
You say that the buildings insurance premium seems high - do you know if there have been any recent claims? That would push up the premium.

With flats, there tend to be lots of 'escape of water' claims. i.e. a leak/overflow in the upstairs flat causes damage to the downstairs flat.