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Right To Manage Insurance
Right to manage insurance is another name for buildings insurance for properties arranged under a right to manage (RTM) company.
Usually in a building, such as a block of flats, individuals own and insure their own property as a leaseholder. The freeholder (the landlord) of the property arranges the building insurance and insurance for communal areas. All the leaseholders are asked to contribute a percentage of the insurance costs.
Legislation (the Commonhold and Leasehold Reform Act 2002) provides a right for leaseholders to take responsibility of their landlord’s management functions by setting up a right to manage company.
This empowers leaseholders, who generally hold the majority of value in the property, to take responsibility for the management of their block.
Benefits of arranging right to manage insurance
It is not unheard of for the previous freeholder (landlord) to have added as much as 50% to the insurance payment when arranging the cover – so buying the buildings insurance collectively as a right to manage company means you can potentially make substantial savings on the cost of the policy.
Another benefit of arranging your own leaseholder’s buildings insurance is that you can ensure that your policy covers things such as fixtures and fittings (such as built-in cupboards, kitchens and bathroom fittings) in each individual household too.
These parts of a household are typically not covered by a contents insurance policy and many block of flats insurance policies do not offer it either. At UKinsuranceNET, our right to manage insurance policies do cover the buildings fixtures and fittings, giving you peace of mind.
Who may right to manage insurance be suitable for?
Buildings insurance for properties under right to manage is suitable for a group of individuals who were previously leaseholders and who have set up an RTM company and need buildings insurance.
It is important that when an RTM company is set up, you do get buildings insurance quotes with another provider of leaseholder’s buildings insurance and not just the existing one insurer – you may be surprised how cost-effective the cover can be.
Why do you need specialist leaseholders buildings insurance cover?
If you live in a building where there are separate households – such as a block of flats or a maisonette – then traditional home and contents insurance will not provide the correct type of protection needed.
In fact, if you try and use a standard home insurance policy to cover a block of flats, maisonette etc., then you may typically find that in the event of a claim, your policy is invalid.
This is because the risks faced by a building where there is more than one separate household are vulnerable to additional risks that a standard residential home isn’t. For example:
- a block of flats will have communal areas that need insuring, such as hallways;
- with more people living in a building (such as a block of flats), statistically there is more chance of a claim being made;
- depending on the damage, the cost to repair the buildings could run a lot higher than that of a house or bungalow, so a special RTM insurance policy needs to reflect that increased sum insured.
Does right to manage insurance include contents insurance?
Typically, RTM insurance covers the building, and its fixtures and fittings, but contents insurance can be arranged separately for individual owners.
Does ground rent and the service charge go towards the building insurance?
The service charge typically covers things like maintenance of the building and communal areas, heating, lighting, cleaning etc. It will also go towards the building insurance.
Ground rent is something you pay to the landlord (the owner of the freehold) and this charge does not include buildings insurance.
You can check the terms of your leasehold agreement to find out more about service changes and your ground rent.
Why choose us at UKinsuranceNET?
Block of flats insurance / right to manage insurance must provide a wide range of protection for the groups’ collective investment. At UKinsuranceNET, we can help you access affordable, comprehensive cover that offers some great benefits such as:
- Cover for fixtures and fittings.
- Expert Advisors
Why not get in touch today for a free, no obligation quote? Or if you have any questions, please feel free to call us – we will be more than happy to help.