Buildings insurance for terraced flats with own entrance

mvk0016

Hi, we are in a top floor terraced flat/maisonette and we also have a bottom/ground floor flat below us. We both have our own individual flat entrances, facing the street, and individual (not shared) small back gardens. We have share of freehold and the owners of the flat downstairs also have share of freehold. These flats are not converted (we're in Greenwich and apparently they were purpose-built in the 1900s for Royal Navy officers' widows!).

We have extreme trouble finding the right type of Buildings insurance, as it needs to cover top and bottom flats at the same time, we have been with Deacon all these years, as it was the only one we had found (I think from a neighbour recommendation, there are other flats like ours in our terrace) but it's now gone up to a ridiculous amount (more than £1000 for 2 flats that are less than 80 sq m each!). Value of the flats is around 400.000-425.000 if they were to be put on the market right now.

Any ideas of any companies apart from Deacon offering this type of insurance and how we can find them? Google searches always bring results for building owners/blocks of flats, but we need a policy that is in all 4 names of the 4 owners (2 owners per flat), not in one person's name, as it's not one person that is the owner/building manager.

TELLIT01

Building and contents insurance costs have gone through the roof over the past 12 months or so.  I was reading today of somebody where the renewal cost had increase by over 160% on last year.  Given the value of the properties I would probably bite the bullet and renew, particularly if time is short for renewal.  Alternatively, try to find an insurance broker as it is a pretty niche market.

DullGreyGuy

mvk0016 said:

Any ideas of any companies apart from Deacon offering this type of insurance and how we can find them? Google searches always bring results for building owners/blocks of flats, but we need a policy that is in all 4 names of the 4 owners (2 owners per flat), not in one person's name, as it's not one person that is the owner/building manager.

Home insurance is designed to cover a single home, block of flats insurance is designed to provide buildings insurance for a single building with multiple homes inside it (or home and shops etc).

Option 1, buy separate home insurance each, as was traditionally done in Scotland where leasehold never existed, but expect challenges when it comes to big claims like subsidence. It also exposes you to the risk that the flat below doesn't buy insurance and so yours effectively becomes frustrated.

Option 2, but Block insurance. If you google converted house insurance (I know yours isnt actually a convert) then you will find providers specialising in block insurance when there is 2-4 dwellings in the building rather than Block insurance for 60+ dwellings

Option 3 - stick with your current insurer if you are confident they know the situation and are still comfortable with it. 

Smithcom

DullGreyGuy said:

mvk0016 said:

Any ideas of any companies apart from Deacon offering this type of insurance and how we can find them? Google searches always bring results for building owners/blocks of flats, but we need a policy that is in all 4 names of the 4 owners (2 owners per flat), not in one person's name, as it's not one person that is the owner/building manager.

Home insurance is designed to cover a single home, block of flats insurance is designed to provide buildings insurance for a single building with multiple homes inside it (or home and shops etc).

Option 1, buy separate home insurance each, as was traditionally done in Scotland where leasehold never existed, but expect challenges when it comes to big claims like subsidence. It also exposes you to the risk that the flat below doesn't buy insurance and so yours effectively becomes frustrated.

Option 2, but Block insurance. If you google converted house insurance (I know yours isnt actually a convert) then you will find providers specialising in block insurance when there is 2-4 dwellings in the building rather than Block insurance for 60+ dwellings

Option 3 - stick with your current insurer if you are confident they know the situation and are still comfortable with it. 

With option 1, will the policyholder need to declare in advance exactly which parts of the building are being insured under the policy, given that often the leaseholders may be jointly and severally responsible under the lease for arranging a joint policy.   Is there any danger of the insurer applying average, given that the building at risk is potentially the entire building, particularly if the other flat does not insure in full (or their insurance fails)?    Is it just subsidence claims where claims issues (including application of average) may exist?

Whilst there are pros and cons with options 1/2/3, I would suggest that option 1 potentially carries most risk.

SC

DullGreyGuy

Smithcom said:

DullGreyGuy said:

mvk0016 said:

Any ideas of any companies apart from Deacon offering this type of insurance and how we can find them? Google searches always bring results for building owners/blocks of flats, but we need a policy that is in all 4 names of the 4 owners (2 owners per flat), not in one person's name, as it's not one person that is the owner/building manager.

Home insurance is designed to cover a single home, block of flats insurance is designed to provide buildings insurance for a single building with multiple homes inside it (or home and shops etc).

Option 1, buy separate home insurance each, as was traditionally done in Scotland where leasehold never existed, but expect challenges when it comes to big claims like subsidence. It also exposes you to the risk that the flat below doesn't buy insurance and so yours effectively becomes frustrated.

Option 2, but Block insurance. If you google converted house insurance (I know yours isnt actually a convert) then you will find providers specialising in block insurance when there is 2-4 dwellings in the building rather than Block insurance for 60+ dwellings

Option 3 - stick with your current insurer if you are confident they know the situation and are still comfortable with it. 

With option 1, will the policyholder need to declare in advance exactly which parts of the building are being insured under the policy, given that often the leaseholders may be jointly and severally responsible under the lease for arranging a joint policy.   Is there any danger of the insurer applying average, given that the building at risk is potentially the entire building, particularly if the other flat does not insure in full (or their insurance fails)?    Is it just subsidence claims where claims issues (including application of average) may exist?

Whilst there are pros and cons with options 1/2/3, I would suggest that option 1 potentially carries most risk.

SC

Option 1 does come with potential challenges, as already highlighted, however it's common in Scotland where each person owns their own flat and there is no freeholder sitting over them. Averaging isnt applied but your insurer is only liable for your share hence the highlighted issue if one of the flats doesn't buy insurance... big fire that guts the flat below and damages your property, your insurers wont do repairs to your flat until the structural work is done to the flat below bu they were uninsured and dont have the funds to repair it. Ultimately your insurers will settle as CIL and you'll have to deal with your uninsured neighbour

That said, people in Scotland have lived with these risks and most have managed to get through it for a century or more. 

Averaging, in insurance terms, is reducing the value of a claim when the sum insured has been under declared. So if you stated your contents were worth £30,000 but when claiming £5,000 after a break in your insurer discovers your content was more like £60,000 then the averaging clause would reduce your claim to £2,500 as you'd only insured half the value of your contents. 

PS. no idea how "rebuild" costs are calculated for a flat but looking at our survey for our own home there is a value there that is clearly not for the whole building and so would be the reasonable figure to use (inflation adjusted) were I responsible for Buildings insurance (freeholder buys ours)

eddddy

DullGreyGuy said:

Option 1 does come with potential challenges, as already highlighted, however it's common in Scotland where each person owns their own flat and there is no freeholder sitting over them. Averaging isnt applied but your insurer is only liable for your share hence the highlighted issue if one of the flats doesn't buy insurance... big fire that guts the flat below and damages your property, your insurers wont do repairs to your flat until the structural work is done to the flat below bu they were uninsured and dont have the funds to repair it. Ultimately your insurers will settle as CIL and you'll have to deal with your uninsured neighbour

(In England and Wales - I don't know about Scotland...)

When buying a flat or maisonette with this set-up (each leaseholder is responsible for insuring their own part of the building) - conveyancing solicitors generally advise getting a "Contingent Buildings Insurance legal indemnity policy".

In fact, mortgage lenders might insist on it. Here's some info from a provider of this insurance:

The Contingent Buildings Insurance legal indemnity policy provides cover when any part of the building of which the flat forms part is damaged by a type of event against which the flat or the building was insured at the policy’s commencement date, but

• the landlord, managing agent, residents association or another lessee has failed to insure entirely or for an adequate amount

Link: https://gcsonline.gcs-title.co.uk/PolicyTypesKeyFacts.aspx?type=CB

So the solicitor has to check the the flat below has suitable buildings insurance on the date of purchase, but the indemnity policy provides cover if the person below discontinues their insurance, or their insurance becomes inadequate in some way.


But generally, these types of policies aren't sold direct to consumers - only via conveyancing solicitors. So if the OP didn't arrange one during their purchase, I'm not sure of the route to getting one now. (Maybe ask a solicitor?)

Smithcom

DullGreyGuy said:

Smithcom said:

DullGreyGuy said:

mvk0016 said:

Any ideas of any companies apart from Deacon offering this type of insurance and how we can find them? Google searches always bring results for building owners/blocks of flats, but we need a policy that is in all 4 names of the 4 owners (2 owners per flat), not in one person's name, as it's not one person that is the owner/building manager.

Home insurance is designed to cover a single home, block of flats insurance is designed to provide buildings insurance for a single building with multiple homes inside it (or home and shops etc).

Option 1, buy separate home insurance each, as was traditionally done in Scotland where leasehold never existed, but expect challenges when it comes to big claims like subsidence. It also exposes you to the risk that the flat below doesn't buy insurance and so yours effectively becomes frustrated.

Option 2, but Block insurance. If you google converted house insurance (I know yours isnt actually a convert) then you will find providers specialising in block insurance when there is 2-4 dwellings in the building rather than Block insurance for 60+ dwellings

Option 3 - stick with your current insurer if you are confident they know the situation and are still comfortable with it. 

With option 1, will the policyholder need to declare in advance exactly which parts of the building are being insured under the policy, given that often the leaseholders may be jointly and severally responsible under the lease for arranging a joint policy.   Is there any danger of the insurer applying average, given that the building at risk is potentially the entire building, particularly if the other flat does not insure in full (or their insurance fails)?    Is it just subsidence claims where claims issues (including application of average) may exist?

Whilst there are pros and cons with options 1/2/3, I would suggest that option 1 potentially carries most risk.

SC

Option 1 does come with potential challenges, as already highlighted, however it's common in Scotland where each person owns their own flat and there is no freeholder sitting over them. Averaging isnt applied but your insurer is only liable for your share hence the highlighted issue if one of the flats doesn't buy insurance... big fire that guts the flat below and damages your property, your insurers wont do repairs to your flat until the structural work is done to the flat below bu they were uninsured and dont have the funds to repair it. Ultimately your insurers will settle as CIL and you'll have to deal with your uninsured neighbour

That said, people in Scotland have lived with these risks and most have managed to get through it for a century or more. 

Averaging, in insurance terms, is reducing the value of a claim when the sum insured has been under declared. So if you stated your contents were worth £30,000 but when claiming £5,000 after a break in your insurer discovers your content was more like £60,000 then the averaging clause would reduce your claim to £2,500 as you'd only insured half the value of your contents. 

PS. no idea how "rebuild" costs are calculated for a flat but looking at our survey for our own home there is a value there that is clearly not for the whole building and so would be the reasonable figure to use (inflation adjusted) were I responsible for Buildings insurance (freeholder buys ours)

I disagree that there is no risk of average applying (or something that resembles average)

You have to bear in mind that:

1. The insurer will not necessarily be aware that they are covering a portion of the building, so the policy may not be appropriately worded.

2. The Risk Address probably needs to be the entire building, as opposed to Flat 1A because the leaseholders may well be jointly and severally liable for the repairs/insurance performance.

3. Not every flat will purchase (correct) insurance

4. Even if damage was contained within an individual flat, in theory, each individual insurer in the block would need to make their individual contribution, bearing in mind that an individual's leaseholder responsibility for the building, may be a proportion of the overall building, as opposed to the rebuilding value of the individual unit.    

I do realise that things are different under the Scottish system, but there's a legal reason for that, as I understand it.

Much as I'm not a loss adjuster, logic tells me that there are immeasurable issues by having separate buildings policy, not least because of the uncertainty as to where the extent of each leaseholder's liability starts/stops.

SC

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DullGreyGuy

Averaging is explicitly for the value of the sum insured being incorrectly declared. It doesn't get expanded because the insurer didn't realise that the property had a dozen outbuildings or that "Flat 1" means there is probably at least a "Flat 2" as long as the sum insured is correct.

The OP state they have the freehold so if they need to change the lease to move responsibility to individual leaseholders. 

Its still better for them to take another path, there is still risks of delays in any claims etc but not a risk of averaging unless they underestimate the sums insured.

mvk0016

Thanks everyone, we decided to go with the insurance company we already had for the time being, and we'll do a bit more thorough research on this next year before renewal, to see if we can change to something more suitable/cheaper.

Smithcom

DullGreyGuy said:

Averaging is explicitly for the value of the sum insured being incorrectly declared. It doesn't get expanded because the insurer didn't realise that the property had a dozen outbuildings or that "Flat 1" means there is probably at least a "Flat 2" as long as the sum insured is correct.

The OP state they have the freehold so if they need to change the lease to move responsibility to individual leaseholders. 

Its still better for them to take another path, there is still risks of delays in any claims etc but not a risk of averaging unless they underestimate the sums insured.

 ....and there lies the problem.

Is the correct Declared {Rebuilding} Value:

1. The Rebuilding Cost of the entire building?
2. The Rebuilding Cost of the entire building / number of flats?
3. Rebuilding cost of a specific flat, ignoring common parts/roof/foundations etc

The Risk Address would really need to be the entire building, otherwise, there's the danger that common parts/roof/foundations etc would not be covered.  So, if the Risk Address is the entire building, and if the leaseholder insures only a percentage of that (a la options 2/3 above), why wouldn't average apply, particularly if the other leaseholders did not insure. 

You also need to bear mind that many leases require the building to be insured as a whole, as opposed to an aggregate of x number of policies which may or may not add up to the correct full-building Declared Value.

There are dozens of permutations of how an individual (per apartment) policy could play out, but it has the ability to be incredibly messy, particularly with different insurers involved. 

SC

DullGreyGuy

As mentioned previously, use the rebuild value as provided by the RICS accredited survey and inflation adjust it. Surveyors know what to put in the forms when doing the calcs and most insurers suggest looking at the survey to get the number.

Alternatively, get a blanket/bedroom rated policy which has unlimited / £1m cover which only asks about things in your home not your building.