Buildings insurance in shares freehold.

pjaj

My daughter owns a flat in a converted mid terrace house in SW London.
The building is divided into two flats, a single bedroom downstairs one and my daughter's 3 bedroom first floor one.
The freehold of the building is vested in a non trading dormant company.
The sole shareholders of that company are my daughter and the owner of the other flat, so they are effectively their own landlord / tenants.
We have been saying the rebuild cost is £800K for the whole building and £400K for each flat. A generous overestimate IMHO.
They have always individually insured their contents, but jointly insured the building.
They have had to change insurer frequently as the renewal offers always get hiked to unacceptable levels after a year or so and we have to start the search all over again.
Different insurers /  brokers have, over the years, offered various types of policy, everything from simple buildings to landlord and tenant.
Last year they insured through Homeprotect, but this year they have hiked the quote from £455 to £707. On top of that they are now saying that they won't insure again in any case due to the ownership setup. This is despite having previously been repeatedly informed of the situation and saying it was OK.
Current quotes from other sources are ridiculous, over £1K and in excess of £2K in some cases.
We are thinking of insuring the flats individually as the premiums seem to drop dramatically when we go from the whole building to just a part of it. But would this be accepted by insurers?
We've been searching high and low, including MSE's tools, for 2 weeks without much success.
Surely this cannot be an isolated situation. There must be thousands of similar split properties that need buildings insurance.
How do others do it and can you recommend any companies?

DullGreyGuy

Flats would normally be covered by "Block (of flats) Insurance" which is a type of commercial property insurance. Pricing is typically in line with commercial insurance not consumer and will come as a shock to those who haven't lived in flats before. 

There are a few intermediaries that claim to specialise in small conversions (up to 4 units) but have no experience of actually dealing with them. 

Most home insurance is written to cover a single family dwelling so is inappropriate for covering a building with two different units in it. 

Scotland doesn't have leasehold and so people insuring individual flats is much more common, those these days factoring companies (similar to managing agents) are becoming more common who again buy Block insurance. Your main issue is that claims will be slow for anything that covers the main structure of the building as the two companies will fight it out over what share, if any, each company should pay. You also introduce the risk of the flat down stairs failing to buy insurance or making false declarations that invalidate the insurance etc and say they had a big fire, your insurers arent going to pay for structural work for the flat below so you end up with an uninhabitable place. 

If you decide to go down the individual route you need to get the leases changed to put it onto the leaseholders to buy insurance else the freeholder could be deemed liable for breaching the lease and not buying insurance.

pjaj

DullGreyGuy said:

Flats would normally be covered by "Block (of flats) Insurance" which is a type of commercial property insurance. Pricing is typically in line with commercial insurance not consumer and will come as a shock to those who haven't lived in flats before. 

There are a few intermediaries that claim to specialise in small conversions (up to 4 units) but have no experience of actually dealing with them. 

Most home insurance is written to cover a single family dwelling so is inappropriate for covering a building with two different units in it. 

Scotland doesn't have leasehold and so people insuring individual flats is much more common, those these days factoring companies (similar to managing agents) are becoming more common who again buy Block insurance. Your main issue is that claims will be slow for anything that covers the main structure of the building as the two companies will fight it out over what share, if any, each company should pay. You also introduce the risk of the flat down stairs failing to buy insurance or making false declarations that invalidate the insurance etc and say they had a big fire, your insurers arent going to pay for structural work for the flat below so you end up with an uninhabitable place. 

If you decide to go down the individual route you need to get the leases changed to put it onto the leaseholders to buy insurance else the freeholder could be deemed liable for breaching the lease and not buying insurance.

Thanks for your comments and advice.
The other owner has already gone for individual flat insurance and my daughter has decided to follow suit. Both have chosen the current insurer so there won't be any conflict of interest if a major claim occurs. My daughter also has her contents with them. Next year she will try to amalgamate the two policies, but since the renewal on the buildings is today (!) and we are fed up with hours of searching  and ridiculous premiums, she's going with the Compare the Meercat quote for now.

DullGreyGuy

pjaj said:

DullGreyGuy said:

Flats would normally be covered by "Block (of flats) Insurance" which is a type of commercial property insurance. Pricing is typically in line with commercial insurance not consumer and will come as a shock to those who haven't lived in flats before. 

There are a few intermediaries that claim to specialise in small conversions (up to 4 units) but have no experience of actually dealing with them. 

Most home insurance is written to cover a single family dwelling so is inappropriate for covering a building with two different units in it. 

Scotland doesn't have leasehold and so people insuring individual flats is much more common, those these days factoring companies (similar to managing agents) are becoming more common who again buy Block insurance. Your main issue is that claims will be slow for anything that covers the main structure of the building as the two companies will fight it out over what share, if any, each company should pay. You also introduce the risk of the flat down stairs failing to buy insurance or making false declarations that invalidate the insurance etc and say they had a big fire, your insurers arent going to pay for structural work for the flat below so you end up with an uninhabitable place. 

If you decide to go down the individual route you need to get the leases changed to put it onto the leaseholders to buy insurance else the freeholder could be deemed liable for breaching the lease and not buying insurance.

Thanks for your comments and advice.
The other owner has already gone for individual flat insurance and my daughter has decided to follow suit. Both have chosen the current insurer so there won't be any conflict of interest if a major claim occurs. My daughter also has her contents with them. Next year she will try to amalgamate the two policies, but since the renewal on the buildings is today (!) and we are fed up with hours of searching  and ridiculous premiums, she's going with the Compare the Meercat quote for now.

Better update the leases then!