Buildings insurance

EimearHowley

Hello,
we live in an converted Victorian house split into 3 flats we all have share of freehold. We currently each have separate buildings insurance policies. No insurance company has ever questioned this but one of the other property owners thinks we should all be with the same company just different policies and not have different insurance companies also. We had to move companies as we couldn’t get subsidence insurance with the company the others use (even though they are covered themselves). Does anyone know if this is an issue? Can we be with different companies? Or do we need to have one single buildings insurance? 

Brie

My understanding of building insurance for blocks of flats is that there needed to be one policy to cover the entire building.  Otherwise how would you know who to claim from if the roof blows off or there's damage to more than 1 flat?  Obviously even a ground floor flat benefits from the roof over the top floor flat.  Likewise a top floor flat would suffer due to subsidence even though the ground floor flat might be effected more. 

Also even if you were splitting a claim over 3 policies you'd then have 3 deductibles reducing the payout.  And different policies may well have different cover etc.  Having more than 1 company involved complicates things even further as how would you get them to agree what work they will cover and to what extent?

My experience is different than yours though being of a Victorian building with 3 flats but only 1 freeholder.  They arranged the building insurance and the 2 leaseholders paid a share based on percentage floor space.   

gwynlas

You need one policy in this situation purchased through the freeholder management company.

eddddy

The starting point is to read your lease to see what it says about insurance. Typically, there are 2 broad types of leases.

• Type 1 leases - Most leases say the freeholder is responsible for insuring the whole building - typically with a single buildings insurance policy.

• Type 2 leases - Less often, leases will divide the building into 3, and make each leaseholder responsible for insuring their part of the building.

Who is the freeholder? Do you jointly own the freehold (often called 'share of freehold')?

Generally, it's probably better to have one insurance policy for the whole building.

If you have type 2 leases, the 3 of you can agree to have one insurance policy if you want. But if one or both of the other leaseholders objects, you cannot force them to agree to having one policy.

DullGreyGuy

EimearHowley said:

Hello,
we live in an converted Victorian house split into 3 flats we all have share of freehold. We currently each have separate buildings insurance policies. No insurance company has ever questioned this but one of the other property owners thinks we should all be with the same company just different policies and not have different insurance companies also. We had to move companies as we couldn’t get subsidence insurance with the company the others use (even though they are covered themselves). Does anyone know if this is an issue? Can we be with different companies? Or do we need to have one single buildings insurance? 

In England/Wales (where Leasehold exists) it is common for the freeholder to buy Block Insurance (Block Of Flats to give it its full name) which covers the whole building and is a type of commercial insurance. Each leaseholder then buys their own contents insurance.

It is possible for each leaseholder to buy their own insurance, as used to be in common in Scotland where leasehold has never existed, it doesn't have to be with the same insurer but it naturally causes headaches because any common areas are not explicitly covered by any policy and you'll get the subsidence claim which causes damage to the ground and 1st and the 2nd floor doesn't want to contribute because they've no damage. 

There is also the risk that one of the owners either hasn't bought insurance or their policy is invalidated by an undisclosed conviction or such and then you have the same as above but now Ground isn't insured and 1st won't pay until the structural work is done by Ground who cannot afford it. You can buy indemnity insurance against this risk though.

EimearHowley

Thank you all - it seems we need to have a single policy through our freeholder company to make things uncomplicated.