Insurance for flat with part freehold

I live in a converted house with 3 self-contained flats, all owner occupied, and the owner(s) of each flat holds 1/3 of the freehold, which is organised in a management company that we run as directors.

I've been reading the lease that was created when the house was converted to flats about 18 years ago, before that it was a house for 90 years.

According to the lease, "the Lessor" includes the management company, and is responsible for the roofs, gutters, foundations, load bearing walls, main load bearing joints and floors, Common Parts, Common Paths, All Service Installations.

The Lessees are responsible for internal joinery, internal plaster, tiling, all internal surfaces of walls, floors and ceilings (down or up to the joists) and windows and doors (outside and inside), non-loadbearing walls, to the apartments. My lease also makes my flat responsible to the Lessee for the whole structure of the garage, including walls, floors and ceilings.

My question is, if the management company takes out buildings insurance but the flat owners only have contents insurance and the house burns down, it would seem from the writing in the lease that the insurance company would only have to pay for a hollow shell of the building and roofs. It would not have to pay to rebuild the garage, and it would not have to pay to install plasterboard and remake the internal walls, it would not have to pay for windows or doors.

Am I reading this correctly? Is this normal? If everyone who owned a flat had similar wording in their lease, would this mean all leaseholders need their own buildings insurance to support the rebuilding of their property in the event of a total loss, say in a fire? Or, is there some product that management companies can take out that will also include the rebuilding of the whole property as it was, and therefore leaseholders are only liable for contents?

Sorry for the long post.

Comments

  • eddddy
    eddddy Posts: 16,145
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    edited 26 October 2023 at 9:16AM

    You've misunderstood a very important aspect - assuming your lease is a 'typical' lease.

    You're correct that...
    • The lessor (freeholder) is responsible for the structure of the building, etc
    • Each lessee (leaseholder) is responsible for many parts of the building within their flat

    However, the lessor (or their management company) will be responsible for providing one single insurance policy that provides cover for all of the above - i.e. the parts of the building owned by the lessor and the parts owned by the lessees.

    So for example, if your flat's internal walls / plasterboard are damaged by fire, escape of water, etc - you would claim on the lessor's (freeholder's) insurance policy.

    So if the whole building burned down, a single claim on a single policy should cover everything.



  • ro2778
    ro2778 Posts: 101
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    eddddy said:

    You've misunderstood a very important aspect - assuming your lease is a 'typical' lease.

    You're correct that...
    • The lessor (freeholder) is responsible for the structure of the building, etc
    • Each lessee (leaseholder) is responsible for many parts of the building within their flat

    However, the lessor (or their management company) will be responsible for providing one single insurance policy that provides cover for all of the above - i.e. the parts of the building owned by the lessor and the parts owned by the lessees.

    So for example, if your flat's internal walls / plasterboard are damaged by fire, escape of water, etc - you would claim on the lessor's (freeholder's) insurance policy.

    So if the whole building burned down, a single claim on a single policy should cover everything.



    That's a relief, so it's just a matter of finding a broker and getting that type of insurance? And presumably it's not possible to get such insurance without a broker or is there a name for that type of policy and somewhere I can search for it?
  • DullGreyGuy
    DullGreyGuy Posts: 9,184
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    There are other classes of intermediaries that sell Block Insurance but you probably won't find any direct insurers offering it. "Block" can be a converted house or a massive development with 1,000+ flats in it and is a specialist form of Commercial Property insurance
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