Jump to content

A Buildings insurance puzzler


LordThornber

Recommended Posts

Now then, here goes...your views are of interest.

 

My Mother lives in a block of 14 flats, the buildings insurance is covered by a block policy and has been paid via one of the residents who has kindly done the admin for X number of years.

 

The policy is due for renewal and he (admin man) had decided enough is enough and is going it alone (insuring his flat himself) as the price is uncompetitive.

 

The insurer has previously stated that it will not insure the properties individually. (That may well have changed though)

 

My Mother is in the process of making a claim and the policy expires very soon, something I wasn't aware of - until today and of course the office is closed.

 

We do not have the policy to read the fine print, we have never had sight of one, but that has not been an issue.

 

My question is, does anyone have a reasonable guess as to what will happen when the policy expires?

 

Will the insurer ask for the whole premium or a 14th share, assuming that they are obliged to meet the claim, which of course is a legitimate one.

 

I assume the insurer will have to have a policy in force in order to meet the claim?

 

Many thanks in advance.

 

Martyn

Link to comment
Share on other sites

Can't answer your question directly, but we also live in flats with a common building insurance. However the flayts are controlled by a deed of covenant which specifies that the common policy will prevail so no individual towner can opt out. Maybe check whether that applies to your situation. We also have a professional factor who runs all this side of thinsg and this stops any individual trying to 'play the game' so to speak.
Link to comment
Share on other sites

Also curious how one individual can insure his/her flat for building cover as presumably the roof and ground may not be directly connected, also outside areas are communal. Doubt any Company will take it. Also as we have a communal policy it is cheaper, maybe the guy needs to look at this.
Link to comment
Share on other sites

Martyn,

 

As far as I know whether or not the policy is renewed is immaterial. It is the fact that the policy was in force on the date of the claim that matters.

 

If you made a claim on a car policy the day before it lapsed it would still be a valid claim no matter how long it took to get sorted.

 

The only thing to point out is that you MUST inform the new insurer of the outstanding claim.

 

Keith.

Link to comment
Share on other sites

Hornets nest time Dave, we own a 2nd property, a leasehold flat. The freehold has recently been sold by the developer (as is their right) and the ground rent is now being collected by the new company.

 

We pay a service charge on the property (which includes buildings insurance), and the Management company recently held a meeting for owners.

 

An issue raised was could individuals now insure their property themselves and the answer is yes.

 

Talk about confused, can't wait for the office to open Monday :D

 

Martyn

Link to comment
Share on other sites

Thanks for that Keith, the thing is, I've always, rightly or wrongly been under the impression that insurance had to be in place whilst a claim was (is) being processed and is ongoing.

 

It may well be an old wives tale or something that no longer exists, these things change of course 8-)

 

Martyn

Link to comment
Share on other sites

LordThornber - 2012-07-07 9:56 PM

 

Thanks for that Keith, the thing is, I've always, rightly or wrongly been under the impression that insurance had to be in place whilst a claim was (is) being processed and is ongoing.

 

It may well be an old wives tale or something that no longer exists, these things change of course 8-)

 

Martyn

 

 

 

 

Martyn - some good news I think mate.

 

I think you may be mistaken on that point. The insurance contract only had to be operational at the moment that the incident leading to the claim happened. Whether the insurance policy continues in force thereafter is not relevant to that claim.

 

The insurer is bearing the risk for any claim events that happen during their time as insurers; the subsequent claims process/admin/repair/rebuilding processes are NOT subject to that policy still being in force throughout.

 

Link to comment
Share on other sites

LordThornber - 2012-07-07 9:51 PM

 

Hornets nest time Dave, we own a 2nd property, a leasehold flat. The freehold has recently been sold by the developer (as is their right) and the ground rent is now being collected by the new company.

 

We pay a service charge on the property (which includes buildings insurance), and the Management company recently held a meeting for owners.

 

An issue raised was could individuals now insure their property themselves and the answer is yes.

 

Martyn

 

Oops, got that one wrong :$

 

I only received the minutes of the meeting yesterday and obviously read them without too close an eye on them...

 

No what CAN happen is that the new owner of the freehold can choose it's own insurance as opposed to the Managment company which chooses it now.

 

Sorry if I may have misled anyone.

 

Bruce, thanks for that, I hope that is the case then, you're normally pretty clued up on these matters so fingers crossed. I just want an easy resolution to the matter, claim sorted & insurance renewing either with them or someone else if it has to be.

 

Mum at nearly 86 years young is quite rightly more interested in her cat feeding duties....

 

Martyn

Link to comment
Share on other sites

I'm absolutely sure Bruce is right: Insurance is a contract with a start date and an end date. "Events" taking place between those dates are insured. Only the claim has to have been submitted and accepted between those dates. There is no requirement for remedy to be completed within the insured term. But, as ever, speak to the insurer.

 

I'd also be very inclined to quiz the insurance company on their attitude to insuring the flats individually. Doesn't make sense to me at all.

 

Since each flat is dependent on every other flat for either support or weather protection, with flats on the intermediate floors dependent for both, I don't understand the concept of insuring individually, and more to the point, even if there is an insurance that includes, for each insured, a proportion of an assumed shared liability, I don't see how that could be a cheaper option than a block insurance with the cost shared pro-rata.

 

What happens if someone allows their buildings policy to lapse and there is a claim, or goes into a home but retains the flat leaving it vacant, or even goes on an extended holiday, and the roof leaks? Unlikely, I accept, but floods from above are not that unusual even if major structural events are. How would the individual insurance cater for that? What about powers of entry in such an emergency? This must be provided for somewhere (not an insurance matter, but there must be provision via the deeds, which implies some intention for some form of collective management).

 

Who is now responsible for maintaining common areas?

 

Are there lifts? Who maintains them?

 

Who maintains the essential public liability insurance?

 

Who is responsible for repairing the roof?

 

Surely there is a binding covenant in the deeds requiring the existence of a residents' society, or similar, that has responsibility for these matters, or there is a management company that is equally charged? I think sight of the deeds may be necessary, to see if something has been missed, or allowed to lapse. In the absence of a formal agreement the uninsured liabilities seem to me to be potentially crippling, especially for the roof, or if the stairs get into a dangerous condition and the postman has a fall, for example.

Link to comment
Share on other sites

Thanks Brian, I hope that's the case and it goes smoothly.

 

I'll be looking at Mum's copy of the deeds later, that may answer a few questions.

 

There is no formal or informal managment company/residents association. There is one in a legal sense, i.e. one was formed when the properties were built in 1978, but lapsed is the word I think that applies. We receive no correspondence from it.ming is covererd by

 

No one maintains any common areas, there are no lifts just concrete and metal stairs. Mum is ground floor.

 

The roof belongs to the individual flat beneath it, i.e. the first floor owners. There are only 2 levels.

 

Public liability insurance, I'm assuming is covered by the buildings policy.

 

Passage of time dulls the memory (well mine :D ), and I'm sure that we had to insure as a block, but how can that be enforced?

 

If the flat above Mum say caused her property damage through water leaking (for example), Mum would (presumably) have to claim through her insurance and then them via the potentially uninsured upstairs owners - a nightmare.

 

As for cost, a quick internet check reveals that individual insurance can be more than 50% cheaper than the block insurance, which almost certainly means that you're not getting like for like.

 

I'll reveal all when we're nearer to the result!!

 

Martyn

Link to comment
Share on other sites

LordThornber - 2012-07-08 12:33 PM......................Public liability insurance, I'm assuming is covered by the buildings policy.

Never assume - but you'll know that! :-D

 

Passage of time dulls the memory (well mine :D ), and I'm sure that we had to insure as a block, but how can that be enforced?

I would imagine the deeds will contain legally enforceable cross-covenants requiring all residents to be members of a residents' society, and outlining its functions, or stating their obligations one to another. Unless it has formally been wound-up (should be registered with the charities commissioners) any residents' society will still exist as an entity, and (I'm guessing) will still be liable to perform.

 

Usually, in terms of property related liabilities, one can only be legally responsible for what occurs within what one "owns". Flats usually have "common areas" (stairs, courtyards, drying areas, bin stores, etc) that must either be jointly owned, or owned by some legal entity - often a residents' society. With that ownership, come the public liabilities.

 

However, if each first floor flat has its own stairway, maybe that is part of that freehold, and there are no common areas.

 

Even then I'm surprised if there are no covenants because of the possibility that owners of the upper or lower flats might need to have work carried out, but also because both are dependent on the other, as stated, support in the one case, and for maintaining the roof in the other. A roofing job would require scaffolding, which would interfere with your Mother's "quiet enjoyment", so the ground rules should be stated in the deeds. Who has to give whom what notice, and what right of objection does the other party have? Those kinds of things.

 

If the flat above Mum say caused her property damage through water leaking (for example), Mum would (presumably) have to claim through her insurance and then them via the potentially uninsured upstairs owners - a nightmare.

If there were serious damage that an insurer refused to pay out on, possibly citing that material facts had been omitted from the proposal, it would be a choice of paying one's self, or suing the other residents under the (presumed) covenants. Neither being attractive propositions!

 

As for cost, a quick internet check reveals that individual insurance can be more than 50% cheaper than the block insurance, which almost certainly means that you're not getting like for like.

Seems probable to me! I suspect the difference lies in the responsibility for maintaining the common parts, and thereby the public liability that attaches, for which insurance is generally held. Sounds like deeds first, and then some conversations with your Mum's insurer, and possibly with a broker specialising in property insurance. Doesn't sound quite right at present. Lucky old you! :-D

 

I'll reveal all when we're nearer to the result!!

 

Martyn

Link to comment
Share on other sites

Ok, a quick scan of the deeds reveals amongst the covenants that the buildings insurance should be paid to and organised by the lessor.

 

The Lessor (******* Homes) doesn't exist as such, (legally it probably does) we haven't paid it to the lessor since we bought the place.

 

It hasn't to our knowledge been wound up. There has never been a Residents Association.

 

Common areas? As far as I know (legally wise) there are none, parking spaces (1) are alloted to each flat. Mum owns 3 and the most land as her property was built for the builders Mother, she's a greedy so & so :D

 

I suppose one common area though would be the stairs to the upstairs flats.

 

The deeds are clear about maintenance/repair access having to be granted where appropriate.

 

Interesting points as ever and thanks Brian for your words. Hopefully a phone call or 2 tomorrow will shed some light.

 

Laurie Barratt

Link to comment
Share on other sites

OK, a quick update 8-)

 

Well one thing's for sure, we won't be reinsuring with block insurance as already 3 residents have already gone it alone and got individual policies.

 

The Lessor no longer exists, it went into bankruptcy so they (it) can't actually arrange insurance - not as they did of course.

 

One resident that I have spoken with has actually got better insurance than the "block" policy and for £25 less. I asked him about common areas and he'd mentioned it to the new insurer and they were happy to include these in his policy.

 

The old block insurer will not (does not) insure individually so that's out the window.

 

As for the claim that's been made, it is correct that the present insurer will meet the claim (providing it is a valid claim) even though the policy expires in less than a week and of course will not be renewed.

 

Martyn

Link to comment
Share on other sites

I am gladthat you have been able to sort it out, I think. Just be careful because you could still fall foul of a Statutory Notice. This happens where there is no common agreed policy and the Council steps in an does the necessary??? and then charges everyone. It is happening a lot here in Edinburgh with older tenements and the owners are getting bills of up to 20 grand each for building repairs. Possibly maybe get a lawyer to look at everything to ensure you are protected???? I know Scottish Law is different from English so have no direct knowledge but........
Link to comment
Share on other sites

Guest Tracker

It is not unusual for claims to drag on - particularly major damage claims like fire or subsidence and as long as you retain proof that the policy was in force and paid for on the day of the claim causing incident the Insurer will have no grounds to refuse to pay and will in all probability settle the claim no differently to the way that they would if the policy had been renewed.

 

If not go to the Ombudsman to seek redress - but that may well take time!

 

As an aside it matters not whether the policyholder is alive at the time of settlement (as long as they were at the time of the incident - unless the insurer had been advised of their demise - or if it happened immediately before or during the incident) as payment will still be due to the policyholders executors or successors in title - but you will have to establish entitlement to get paid.

 

Having had experience of a fire which affected two semis, both insurers were able to work together under the auspices of a common loss adjuster to resolve matters for both parties and the same should apply to flats - that said it is a hell of a lot easier if one company has the lot whether paid en block or individually.

 

Was/is the block policy in the name of one person and if so is the interest of all the other residents duly noted as a proportion of the total sum insured? If one resident/owner has more floorspace than the others then technically they should have a greater sum insured and thus pay more? Without this an astute insurer could make a case for under insurance on any claim?

 

Under insurance is a real nightmare! Say your home would cost £100,000 to rebuild and you insure it for say £50,000. A claim arises for say £10,000 and the insurer justifiably says that as you only paid to insure half of the value so we are only going to pay half of your claim - in this case £5,000 - leaving you £5,000 out of pocket. You are, in the eyes of the law, deemed to be your own insurer for the other 50% of the total rebuilding (NOT resale) value.

 

Nasty eh! Not worth being underinsured is it? This is where non sum insured policies score as they have no set value but will cover the costs up to something nobody in 'general' and non specialised or top end value housing will ever need like £1,000,000

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

×
×
  • Create New...