Buildings Insurance Gap During RTM Handover, Who Bears Responsibility?

AbuBella

Hello everyone,

Our RTM company takes over management on 21st August, but we have a serious insurance issue. The current managing agents (instructed by freeholder's management company) cannot provide the buildings insurance claims history despite multiple Section 93 requests. Without this, we cannot secure buildings insurance, and the current policy terminates on our handover date.

The current agents only took over in early 2023 and received poor handover information from their predecessors, creating a chain of inadequate record-keeping that now prejudices our ability to secure coverage.

My Questions: If property damage occurs during this insurance gap, who bears liability - the outgoing agents, freeholder's management company, RTM company, or leaseholders? Can I hold the freeholder liable for consistently instructing managing agents who fail to carry out their duties properly?

Has anyone faced similar situations with poor handover chains? Any precedent for freeholder liability when their chosen agents consistently fail obligations?

This could have serious consequences for everyone involved. Any insights or professional advice would be greatly appreciated.

Thanks in advance.

MyRealNameToo

AbuBella said:

Hello everyone,

Our RTM company takes over management on 21st August, but we have a serious insurance issue. The current managing agents (instructed by freeholder's management company) cannot provide the buildings insurance claims history despite multiple Section 93 requests. Without this, we cannot secure buildings insurance, and the current policy terminates on our handover date.

The current agents only took over in early 2023 and received poor handover information from their predecessors, creating a chain of inadequate record-keeping that now prejudices our ability to secure coverage.

My Questions: If property damage occurs during this insurance gap, who bears liability - the outgoing agents, freeholder's management company, RTM company, or leaseholders? Can I hold the freeholder liable for consistently instructing managing agents who fail to carry out their duties properly?

Has anyone faced similar situations with poor handover chains? Any precedent for freeholder liability when their chosen agents consistently fail obligations?

This could have serious consequences for everyone involved. Any insights or professional advice would be greatly appreciated.

Thanks in advance.

What "gap" are you referring to? At present it sounds like you simply won't have insurance rather than it being a gap. 

Have you spoken to the current broker/insurer about potentially novating the current contract across to you? I'd assume the contract only covers your single building/development. 

The current firm has managed to secure insurance and so the fact you can't is at odds with that, at a minimum speak to the same brokers as they used as clearly they've managed to get the policy placed in the past with minimal history. This is commercial insurance, it's very different to consumer insurance!

I dont know much about RTM firms but my assumption would be that forcing the freeholder to allow you to managing it must come with some liability -v- allowing them to freely choose their agency and so would have thought the companies failures would be its own responsibility but the law may say otherwise. 

AbuBella

MyRealNameToo said:

AbuBella said:

Hello everyone,

Our RTM company takes over management on 21st August, but we have a serious insurance issue. The current managing agents (instructed by freeholder's management company) cannot provide the buildings insurance claims history despite multiple Section 93 requests. Without this, we cannot secure buildings insurance, and the current policy terminates on our handover date.

The current agents only took over in early 2023 and received poor handover information from their predecessors, creating a chain of inadequate record-keeping that now prejudices our ability to secure coverage.

My Questions: If property damage occurs during this insurance gap, who bears liability - the outgoing agents, freeholder's management company, RTM company, or leaseholders? Can I hold the freeholder liable for consistently instructing managing agents who fail to carry out their duties properly?

Has anyone faced similar situations with poor handover chains? Any precedent for freeholder liability when their chosen agents consistently fail obligations?

This could have serious consequences for everyone involved. Any insights or professional advice would be greatly appreciated.

Thanks in advance.

What "gap" are you referring to? At present it sounds like you simply won't have insurance rather than it being a gap. 

Have you spoken to the current broker/insurer about potentially novating the current contract across to you? I'd assume the contract only covers your single building/development. 

The current firm has managed to secure insurance and so the fact you can't is at odds with that, at a minimum speak to the same brokers as they used as clearly they've managed to get the policy placed in the past with minimal history. This is commercial insurance, it's very different to consumer insurance!

I dont know much about RTM firms but my assumption would be that forcing the freeholder to allow you to managing it must come with some liability -v- allowing them to freely choose their agency and so would have thought the companies failures would be its own responsibility but the law may say otherwise. 

To note that I have already contacted the freeholder via the supplied email address for insurance purposes. 

I have made them aware of the circumstances, I've even managed to find a well hidden email address for the freeholders estates representatives, I have also emailed the current maintenance company's regional manager.

Good call on getting in touch with the brokers for the current policy. 

Will keep you updated.

MyRealNameToo

AbuBella said:

MyRealNameToo said:

AbuBella said:

Hello everyone,

Our RTM company takes over management on 21st August, but we have a serious insurance issue. The current managing agents (instructed by freeholder's management company) cannot provide the buildings insurance claims history despite multiple Section 93 requests. Without this, we cannot secure buildings insurance, and the current policy terminates on our handover date.

The current agents only took over in early 2023 and received poor handover information from their predecessors, creating a chain of inadequate record-keeping that now prejudices our ability to secure coverage.

My Questions: If property damage occurs during this insurance gap, who bears liability - the outgoing agents, freeholder's management company, RTM company, or leaseholders? Can I hold the freeholder liable for consistently instructing managing agents who fail to carry out their duties properly?

Has anyone faced similar situations with poor handover chains? Any precedent for freeholder liability when their chosen agents consistently fail obligations?

This could have serious consequences for everyone involved. Any insights or professional advice would be greatly appreciated.

Thanks in advance.

What "gap" are you referring to? At present it sounds like you simply won't have insurance rather than it being a gap. 

Have you spoken to the current broker/insurer about potentially novating the current contract across to you? I'd assume the contract only covers your single building/development. 

The current firm has managed to secure insurance and so the fact you can't is at odds with that, at a minimum speak to the same brokers as they used as clearly they've managed to get the policy placed in the past with minimal history. This is commercial insurance, it's very different to consumer insurance!

I dont know much about RTM firms but my assumption would be that forcing the freeholder to allow you to managing it must come with some liability -v- allowing them to freely choose their agency and so would have thought the companies failures would be its own responsibility but the law may say otherwise. 

To note that I have already contacted the freeholder via the supplied email address for insurance purposes. 

I have made them aware of the circumstances, I've even managed to find a well hidden email address for the freeholders estates representatives, I have also emailed the current maintenance company's regional manager.

Good call on getting in touch with the brokers for the current policy. 

Will keep you updated.

Someone else will have to advise the position if the lease says freeholder must by Block Insurance, that the freeholder has always delegated to the MA and you are now becoming the MA via RTM. It feels wrong that the freeholder could be liable for the poor skills of the RTM MA but it's not law I know much about.

Speak to the broker about both novating the current policy or getting a new business policy. 

In case its not obvious, you do need to be speaking to intermediaries for quotes on Block Insurance, which will be handled by their commercial property team not "Home" insurance - there are no aggregators for Block and to my knowledge no direct to buyers insurers (though some MGAs do direct sales)

AbuBella

Hi myrealnametoo, I don't have the lease in front of me right now, but from memory I recall having to secure the buildings insurance within the duties of the freeholder. And as you have said they delegate this to the managing agent that they have instructed. 

If their instructed managing agent fails in the provision of information that prejudices the RTM's ability to secure the required services and buildings insurance in this case, and additionally, if the freeholder decides to terminate and insurance policy 10 months early in spite of that, with the RTM having taken reasonable measures to ensure continuity, in my opinion the freeholder should be held to account.

Regardless, I have already phoned the insurance brokers, they mention that they haven't received instruction to terminate the policy.

Additionally, the current managing agent provides reference a claim being made on building insurance some two years ago, they don't even know the sum paid, or whether the claim had been settled.

I have contacted the solicitors involved in making the claim, and the ex-neighbour, they both state that they weren't pursuing through building insurance and that they have been unsuccessful in making a claim.

Quite the rabbit hole here.

MyRealNameToo

The fact there is currently insurance on the building shows that it's possible to get insurance therefore I wouldnt pin it on the current MA but on the RTM MA if they fail to get insurance.