In most blocks the lease makes the freeholder or the residents' management company insure the whole building, and each leaseholder pays a share through the service charge; you insure your own contents. The sum insured should be the cost of rebuilding, from a reinstatement cost assessment, not the market value of the flats. Leaseholders can ask to see the policy and what commission was paid. We arrange cover through a broker, show the board the options and take no commission.
01Who insures and who pays
In most blocks the lease makes the freeholder or the residents' management company insure the whole building, and each leaseholder pays a share of the premium through the service charge, in the proportion the lease sets. You insure your own contents, and usually any improvements you have made inside your flat if the lease says so.
02How much cover
The sum insured should be the cost of rebuilding the block, not what the flats would sell for. That figure comes from a reinstatement cost assessment by a surveyor; many boards have one done every few years and index-link it in between. Too low and a claim can be scaled down; too high and everyone overpays.
03Commission and what you can see
Leaseholders are entitled to a copy of the policy summary and to ask how the premium was arrived at. FCA rules introduced at the end of 2022 require insurers and brokers to act in leaseholders' interests and to give information about the policy, including commission, on request.
We arrange cover through a broker, show the board the options before renewal, and take no commission on insurance.
04Making a claim
Report damage to the managing agent quickly, with photographs. For a leak, the agent arranges for the cause to be traced and fixed and makes the claim; the policy excess is usually shared through the service charge or charged as the lease allows.
05Questions
Who pays for buildings insurance in a block of flats?
The leaseholders, through the service charge, in the shares set by the lease. The freeholder or management company takes out one policy for the whole building.
Do I need buildings insurance for my leasehold flat?
Usually not: the building is normally insured under the lease by the freeholder or management company. Check your lease, and insure your own contents and any improvements the lease leaves to you.
How is the buildings insurance premium split between flats?
In the proportions the lease sets, often an equal share or a percentage per flat. The same proportions usually apply to the excess on a claim.
Can a managing agent take commission on buildings insurance?
Some do, which is why leaseholders should ask. Insurers and brokers must give information about commission on request. We take no commission on insurance.
How often should a block have a reinstatement cost assessment?
There is no legal rule, but many boards have one every three years or so, with the figure index-linked in between, so the building is neither under nor over insured.
06Guides for directors
- Service charge estimate
- RICS regulated block managers in Essex
- The reserve fund
- Service charge arrears
- Service charge accounts
- Directors' duties in an RMC
- How to choose a managing agent
- A free service charge check
- Service charges explained
- Buildings insurance for blocks
- Fire safety in blocks of flats
- The Directors' Library
- What is block management?
- How to change managing agent
- Residents' management companies
- Right to manage
- Block management fees
- Section 20 major works
- New-build estate fees
- Estate management in Essex