Help! Very few insurers offer joint buildings insurance

alittlejam

Just wondered if anyone else has has a similar experience?

We are buying a 1st floor flat within a converted terraced house with only one other flat on the ground floor.   We agreed to continue an arrangement with the owners of the downstairs flat to have a joint buildings insurance policy that covers both flats.  We are leasholders in a building where the responsibility falls to us for maintenance and insurance.  We only pay a peppercorn rent and no service charges to the freeholder.

The only insurance provider that we can find that will offer such insurance is Churchill.  Despite numerous quotes online followed up with phone calls, I cannot find any other insurers that can offer an alternative quote.   Any suggestions?

kingstreet

The block buildings insurance you need is usually transacted by the freeholder and is a commercial rather than residential proposition. Have you spoken to a broker about the options?

alittlejam

Yes, what you are saying reflects what several insurers have told me, that this is normally only possible if the freeholder lives in one of the properties.

I've not spoken to an insurance broker.  Good point.

alittlejam

I just used the BIBA Find Insurance service and managed to speak to a broker.  The broker could find me alternative providers but no one could offer anything cheaper than Churchill Insurance at £580 per annum.

Thanks again.

theoretica

Maybe two separate policies would work out cheaper.  Any company used to insuring freehold flats (commoner in Scotland) can probably do this.

Sandtree

You are much better off getting a single policy for the whole building, but it will be more expensive than separate policies. 

The problem with @theoretica's suggestion is that it can end up in endless disputes between the insurers... who pays for subsidence claims? Who pays for roof claims? Who pays for common areas claims? What happens if the flat below you hasn't renewed their policy or its void for non-disclosure? 

If you are the 1st floor flat your insurers will likely dispute that they have responsibility for the foundations and won't fix the cracks in your walls until the flat below has fixed the problem. The insurer of the flat below (if there is one), will argue you are benefiting from the work so should contribute. And what about the 3rd floor flat that currently have no damage... they say no to everyone 

Smithcom

theoretica said:

Maybe two separate policies would work out cheaper.  Any company used to insuring freehold flats (commoner in Scotland) can probably do this.

Very possibly. However, if you are on the top floor, does that mean that you don't need to insure the foundations?    If you are on the ground floor, does that mean that don't need to insure the roof?    And on an individual policy, would an average clause not apply?   And what happens if one of the freeholders does not insure.    And what happens if the policy cover is different between the policies?   And will that mean that two excesses are payable in respect of the one claim?    And two loss adjusters are appointed?    And two different insurers involved?   And do you simply take the total buildings sums insured and divide it by two?  

theoretica

Smithcom said:

theoretica said:

Maybe two separate policies would work out cheaper.  Any company used to insuring freehold flats (commoner in Scotland) can probably do this.

Very possibly. However, if you are on the top floor, does that mean that you don't need to insure the foundations?    If you are on the ground floor, does that mean that don't need to insure the roof?    And on an individual policy, would an average clause not apply?   And what happens if one of the freeholders does not insure.    And what happens if the policy cover is different between the policies?   And will that mean that two excesses are payable in respect of the one claim?    And two loss adjusters are appointed?    And two different insurers involved?   And do you simply take the total buildings sums insured and divide it by two?  

All of which do somehow seem to work out with individual flat insurances - I don't know the inside details, I do know they exist and seem quite common here. 

Sandtree

theoretica said:

Smithcom said:

theoretica said:

Maybe two separate policies would work out cheaper.  Any company used to insuring freehold flats (commoner in Scotland) can probably do this.

Very possibly. However, if you are on the top floor, does that mean that you don't need to insure the foundations?    If you are on the ground floor, does that mean that don't need to insure the roof?    And on an individual policy, would an average clause not apply?   And what happens if one of the freeholders does not insure.    And what happens if the policy cover is different between the policies?   And will that mean that two excesses are payable in respect of the one claim?    And two loss adjusters are appointed?    And two different insurers involved?   And do you simply take the total buildings sums insured and divide it by two?  

All of which do somehow seem to work out with individual flat insurances - I don't know the inside details, I do know they exist and seem quite common here. 

https://www.scotsman.com/business/flat-owners-risk-neighbours-lack-cover-2443474

As noted in the Scotsman, it doesn't work that well and there are calls for changes to be made. I believe with newer properties factoring companies are more commonly involved and they buy block insurance and recharge the owners their share.

Smithcom

theoretica said:

Smithcom said:

theoretica said:

Maybe two separate policies would work out cheaper.  Any company used to insuring freehold flats (commoner in Scotland) can probably do this.

Very possibly. However, if you are on the top floor, does that mean that you don't need to insure the foundations?    If you are on the ground floor, does that mean that don't need to insure the roof?    And on an individual policy, would an average clause not apply?   And what happens if one of the freeholders does not insure.    And what happens if the policy cover is different between the policies?   And will that mean that two excesses are payable in respect of the one claim?    And two loss adjusters are appointed?    And two different insurers involved?   And do you simply take the total buildings sums insured and divide it by two?  

All of which do somehow seem to work out with individual flat insurances - I don't know the inside details, I do know they exist and seem quite common here. 

With the greatest of love and respect, your comments validate the expression 'a little knowledge can be dangerous'.  

Unless you can answer the questions that I have raised, you may want to be a little less confident in your responses.  Insurance that is incorrectly arranged and/or with the incorrect disclosures is a disaster waiting to happen.

You may well be correct that incorrectly-arranged insurance does exist, and is common here !!    

eddddy

Smithcom said:

With the greatest of love and respect, your comments validate the expression 'a little knowledge can be dangerous'.  

Unless you can answer the questions that I have raised, you may want to be a little less confident in your responses.  Insurance that is incorrectly arranged and/or with the incorrect disclosures is a disaster waiting to happen.

You may well be correct that incorrectly-arranged insurance does exist, and is common here !!    

Do you mean these questions?

Smithcom said:

 However, if you are on the top floor, does that mean that you don't need to insure the foundations?    If you are on the ground floor, does that mean that don't need to insure the roof?    

The lease should very clearly specify what parts of the building the leaseholder is responsible for (and therefore should insure).

If it doesn't specify that, it would be classed as a defective lease - and you might have trouble getting a mortgage.

If the lease is defective, either the freeholder and leaseholders can voluntarily agree to vary the leases, or one of them can go to tribunal to get a compulsory lease variation.

Smithcom said:

And on an individual policy, would an average clause not apply?   And what happens if one of the freeholders does not insure. And what happens if the policy cover is different between the policies?

I suspect you mean "if one of the leaseholders does not insure".

Conveyancing solicitors usually recommend that a buyer takes out Contingent Building Indemnity insurance. That provides cover, if the other party fails to insure adequately (or at all).

(And/or you sue the other leaseholder for damages as a result of breaching the lease.)

Smithcom said:

And will that mean that two excesses are payable in respect of the one claim?    And two loss adjusters are appointed?    And two different insurers involved? 

It would work the same as 2 semi-detached houses damaged by one incident (e.g. a fire)

So one incident but 2 separate claims by the 2 property owners (probably with different insurers) . Each property owner would pay their own excess etc.

Smithcom said:

And do you simply take the total buildings sums insured and divide it by two? 

No - each leaseholder has insured their own part of the building.


Overall, it's not an ideal solution - but if that's what the lease says, you might be stuck with it.