The Mysterious World of Leasehold Insurance
Are you a leaseholder and got millions of questions about buildings insurance? Well, reason…….
In this blog I will try to answer those frequentlyasked questions made by customers and staff of Town and City. Questions such as what is it, why is it needed, what does it cover and what is the claims process?
DID YOU KNOW we submitted 24 communal claims to the insurers in 2020 and to date have received approximately £36,000 to cover part of the cost of the damage suffered. From theft to storms to car crashes it’s all been covered!
WHAT’S BUILDING INSURANCE AND WHY IS IT NEEDED?
Buildings insurance protects you against the cost of repairing or rebuilding your home if it is damaged or destroyed.
Your lease makes it a requirement that the landlord or freeholder must insure the building and that the cost of this is included within your service charge. Your mortgage provider might also require that this is in place, but you should not arrange for it yourself.
WHAT IS AND ISN’T COVERED?
The insurance covers the cost of repairing damage to the building and your property if it’s caused by an incident such as fire, flood, storm, burst pipes, malicious damage, theft or subsidence. It does not include general wear and tear, damage caused by lack of maintenance or mechanical or electrical breakdowns due to the item coming to the end of its useful life.
The cover is for all structural parts of the building including the roof and walls and for permanent fixtures and fittings such as baths and fitted kitchens. If the item can be reasonably removed and taken to another property this would not be included. It does not, therefore, cover your possessions including furniture, clothing, electrical equipment such as computers or laptops or damage to carpets and flooring.
THESE ARE CLASSED AS CONTENTS, AND YOU ARE ADVISED TO TAKE OUT YOUR OWN CONTENTS INSURANCE TO COVER THESE.
HOW TO KNOW IF YOU’RE COVERED ON CERTAIN THINGS
Our Maintenance Team Leader, Dawn Tinkler has a handy tip to remember what is and isn’t covered, “If you turn the flat upside down and it falls then you know it isn’t covered and if it doesn’t it is!”
…..And finally, there will be an excess on the building’s insurance and any repair costs below this would not be covered.
How a Claim is made?
There are generally two situations that can arise, and I will take you through both…..
1. The damage is from or to the communal areas/structure of the building
You should report this to Town and City Maintenance Team, and we will make the claim and arrange for all the works that are necessary. This includes damage inside your property to fixtures and fittings. We will therefore need to make access arrangements with your or your tenant to do this.
We may need your help with Police crime reference numbers and photographs of the damage, and we will ask if we need this.
2. The damage is from the flat/apartment above or next door
It is important that you first try to contact the resident upstairs to stop the cause of the damage. You should then contact the insurance company to make a claim for the damage inside your property.
Please contact Town and City Maintenance Team if you do not have the insurance details or if you have been unable to contact the resident upstairs.
We will then contact the owner of the property and request that works take place to stop the damage. With your permission, we will also provide your contact details so that you can liaise with them about the works that are necessary and the insurance claim.
The insurance company may send an assessor to check the damage and arrange for the works depending on the extent of it. They will advise you about this and what you need to do if you are organising the works.
Who pays the excess?
In the two previous situations…….
1. Communal areas/structure damage.
The excess will initially be paid by Town andCity out of the Service Charge funds for the building and this includes where the costs related to damage inside your property. A share of the cost up to the excess amount will be applied to your service charge account. Your current payment may cover this cost.
2. Damage from another flat/apartment
How the payment of the cost of the works up to the excess amount will need to be agreed upon with you and the owner of the property from where the damage has been caused.
HOW IS PAYMENT MADE TO SETTLE THE CLAIM?
Once the insurers agree to settle the claim and have received a copy of the invoice for the completed works from either yourself or Town and City, they will send a cheque payment less the excess.
When the Town and City Maintenance Team receive the cheque from the insurers this is matched to the original invoice for the works. They ensure that cheque covers the cost on the invoice above the excess and the remainder is applied to your service charge account.
HOW IS THE INSURANCE CHARGE AND EXCESS SET?
INSURERS TAKE THE FOLLOWING INTO CONSIDERATION WHEN CALCULATING THE PREMIUM OR CHARGE:
- THE EXCESS AMOUNT
- THE FULL REBUILD COST OF THE BUILDING IS BASED ON THE SIZE, TYPE AND METHOD OF CONSTRUCTION
- THE LIKELIHOOD OF A CLAIM WHICH LOOKS AT THE RISKS OF FLOODING IN THE AREA OR SUBSIDENCE IN THE AREA
- PREVIOUS CLAIMS
- PREMIUM TAX
The excess is set at an amount by Town and City to ensure value for money on the premium charge and so that it is also a reasonable amount to have to pay in the event of a claim for the particular building. For example, lower excesses can attract a higher premium cost.
The insurer will also consider how many claims there have been for the building as a whole and not by an individual flat. You are therefore advised to arrange for your own buildings insurance for your house.
WHO SHOULD I CONTACT?
Call the Maintenance Team on 0333 700 6700/Option 1 to report external repairs or if you need help about a possible claim. They will also direct you to or arrange a call from your Property Manager if any other assistance is required.
And now to wrap everything up …
Town and City are required to ensure your building and your share of the cost of this is included within the service charge that you pay. You should not arrange for your own buildings insurance. This means that claims can be made for certain insured incidents and items in your building and home.
Your personal possessions or contents are not included in this cover, and you have been advised to arrange for this yourself if you want this protection.
Depending on how the damage has occurred will determine who makes the claim, arranges the works and pays the excess. If it is from or to communal areas/structures it is the service charge funds for the building. If it is from or to communal areas/structure it is Town and City and if it is from a neighboring or flat above it, is you that does these.
The insurer will make payment by cheque less any excess to either yourself or the building service charge fund once they have agreed the claim and received an invoice for the completed works.
The insurance premium and excess are set by several factors including rebuild cost, previous claims and the likelihood of claims. House owners can pay an insurance charge, and this is for communal areas on the estate and not your property. You are therefore advised to arrange for this yourself if you want this protection.
Written by Brett Nicholson
