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Need to know: what does buildings insurance for flats cover?

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Any property owner is likely to tell you that buildings insurance provides an essential safeguard against the major risks threatening damage or even a total loss of the structure and fabric of the property.

If you are the landlord of a block of flats, however, buildings insurance takes on a particular and specialist dimension – a whole collective of separate residential units comprises the block and, as the landlord, you are responsible for safeguarding several let properties under the same roof, as well as communal areas such as stairwells. 

This means that neither regular home buildings insurance nor standard landlord insurance is likely to provide adequate cover – and instead you need specialist buildings insurance for flats

What it covers

Buildings insurance for flats typically protects the whole of the structure and fabric of the building against such potentially serious risks as fire, flooding, escape of water, impacts (from cars and lorries to falling objects such as trees and aircraft), storm damage, vandalism, theft and, sometimes, subsidence.

The insurance is specially written to recognise the potentially structural peculiarities of a purpose-built block or flat conversion.

The total building sum insured typically equates to the cost of reconstructing the entire building following a major disaster. Estimating the reconstruction costs of a bock of flats is likely to prove more complicated than for a single residential dwelling, so seeking specialist help and advice from a surveyor may be prudent. You can also try the free buildings sum insured calculator service provided by the Royal Institution of Chartered Surveyors (RICS). 

In a situation where multiple tenants may be entering and leaving such a block, insurance for flats may also pay particular attention to the landlord’s liability for any injury sustained by those tenants (or their visitors, neighbours or members of the public) or damage to their property. 

Typically, therefore, landlord liability insurance commonly provides a minimum of £1 million indemnity against such claims – although, in the case of policies arranged by us here at UKinsuranceNET, that liability indemnity insurance typically extends to claims of up to £5 million. 

Who needs it?

If you own the freehold and are the landlord of one or more flats in the block or converted-building you need buildings insurance for flats to safeguard your considerable investment in the structure and fabric of the entire property.

Generally speaking individual leaseholders of flats need worry little about buildings insurance, since this responsibility falls to the freeholding landlord – suggests the Money Advice Service.

An exception arises if the leaseholders have opted to exercise their Right to Manage. Since the introduction of the Commonhold and Leasehold Reform Act 2002, explains the Association of Residential Managing Agents (ARMA), leaseholders have the legal right to take over general management of the entire building from the landlord.

Although precise steps need to be taken when setting up a Right to Manage company, the leaseholders do not need to give any reason for exercising their right, the landlord does not need to give permission, and neither is any formal court ruling necessary. 

But with the Right to Manage comes the leaseholders’ collective responsibility for ensuring adequate protection of the entire block by arranging suitable building insurance for their flats.