In a block of leasehold flats, the buildings insurance is usually arranged by the freeholder, or a management company, not by the individual leaseholders, and the cost is recovered from the leaseholders through the service charge. This is because the whole structure and communal areas need one policy, and the lease normally places that duty on the landlord. Leaseholders have a right to ask for details of the policy.
Leasehold flats are a shared structure, so it makes little sense for each flat to insure its own bricks. One policy covers the entire building, and the lease sets out who arranges it and how the cost is shared.
Who is responsible for insuring a block of flats?
In most leases the freeholder, or landlord, is responsible for arranging the buildings insurance for the whole block, and recovers the premium from the leaseholders through the service charge. Where the leaseholders own a share of the freehold, or run the block through a residents’ management company, they arrange and fund the insurance jointly. The lease is what determines the arrangement.
What does block of flats insurance cover?
It covers the building structure and the communal areas, against risks such as fire, flood, escape of water and storm, together with property owners’ liability for the common parts. It does not cover the contents of individual flats, which each leaseholder insures themselves, nor a leaseholder’s own liability inside their flat.
Do leaseholders have to pay, and can they see the policy?
Yes to both. Leaseholders contribute to the premium through the service charge rather than being billed separately, and they have a right to request information about the buildings insurance policy from the landlord, including a summary of the cover. If a landlord fails to insure as the lease requires, leaseholders have routes to enforce it, including applying to a tribunal.
Does a leaseholder need their own buildings insurance?
Usually not for the structure, because the block policy covers it, and taking out a second buildings policy can cause a conflict at claim time. Leaseholders do need their own contents insurance for their possessions, and may want cover for improvements and their own liability within the flat. Always check what the block policy includes before buying more.
Getting the cover right
Insuring a block means getting the sum insured, the liability limit and the communal cover right for the whole structure, and the rebuild figure in particular needs to reflect full reinstatement. A broker can arrange block cover and make sure it meets the lease requirements. To review block or property cover, get a quote or speak to the team.