Insurance

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Before the worst happens and you need to make a claim, our essential guide to insurance will help you check that you have the right cover in place.

Residents’ Management Company (RMC) directors and committee members often take on the task of arranging buildings insurance on behalf of their fellow residents. Ensuring your block is adequately covered is a major responsibility – and ensuring a competitive price as well as comprehensive protection for leaseholders’ property can be quite a challenge. Policies for blocks of residential flats can contain many different sections and we’ll try and demystify them for you!

The “Buildings Section”

This can also be known as Insured Property, Property Damage, Buildings of the Flats or Material Damage.

This section covers the actual building itself, and is often referred to as the “bricks and mortar”. Cover extends to all areas of the buildings including the individual flats and apartments although it does not cover your contents as these are the responsibility of your individual residents.

The Buildings Section generally covers you against specific risks. A “risk” is something that may happen to the block, such as fire, flood, malicious damage or escape of water and so on. Some policies are written on a “Specified Perils” basis which means that the cover the policy provides is limited to the perils listed in the policy.  Other policies are written on an “All Risks” basis and by definition the cover provided is wider and covers the known and potentially unknown, not restricted to certain specified perils. This kind of cover is slightly more expensive but is worth seeking out as the level of protection offered is much wider.

Lessee’s Fixtures and Improvements

Sometimes individual flat owners undertake extensive renovations or refurbishments to their own flat. These refurbishments can be quite expensive and significantly increase the value of that individual flat. Depending on the nature and timing of a building valuation, such improvements are at risk of being inadequately insured.

Lessee’s fixtures and improvements cover is designed to protect each lessee who possesses a flat or apartment containing improvements beyond its original specification.

Terrorism

Terrorism Insurance covers damage to the buildings caused by an act of Terrorism. It’s worth remembering that Terrorism Cover is not automatically included unless you specifically ask for it and pay extra premium to reflect this.

Liabilities

Liability Insurance cover can include Public Liability, Employers Liability and Directors and Officers Liability.

Public Liability  If a visitor to the property was injured after a slip, trip or fall or a resident slipped on a wet floor and suffered injury then a potential claim for compensation against the RMC could arise, although it is always worth remembering that the RMC’s negligence has to be proven.

Limits of Indemnity range from £1 million to £10 million or more. Whilst a lower figure may appear on first sight to be adequate, consider what amounts a Court may award in the event of permanent disability to several people!

Employers Liability is sometimes referred to as EL and is one of only a handful of compulsory Insurances in the UK. In a nutshell it covers your liability as an employer whether the employee be paid or unpaid, full time, part time, or temporary It is considered prudent for an RMC to hold both EL and PL cover to ensure that “grey areas” are included.

If one of your employees was injured whilst carrying out his or her duties then the RMC as the employer, could be liable. Once again the claimant would have to prove that the RMC was negligent.

The normal Limit of Indemnity is £10 million, which is generally considered to be adequate.

Directors and Officers Liability is a relatively new type of cover in the UK market. It protects the individual members of the Residents’ Management Company against their legal liability following “wrongful acts” arising when carrying out their RMC duties. “Wrongful Acts” are defined in the policy and include alleged breach of duty, negligence, misleading statement and defamation.

The potential for error that can lead to a legal action is very real. When there is financial loss situations can change and RMC members can quickly be faced with the prospect of defending an action that has been brought against them.

Each potential claim is judged on the material facts behind the particular incident. The point to remember is that RMC members whether legally liable, or not, are exposed to the potential risk of litigation and legal costs. Policy Limits of Indemnity normally range from £50,000 to £1 million

Lift Inspection and Breakdown Insurance

If you have a lift within your block you are required by law to have it inspected every 6 months by an approved “competent authority” and hold appropriate reports to confirm. You can buy a policy that covers the inspection element and it is also worth noting that this cover is subject to VAT at the current rate. It is common to cover your lifts against breakdown; this cover can prove to be extremely useful and can also be extended to cover other machinery such as automatic entrance doors and electric gates or barriers.

Conclusion

The second -and vitally important – thing to remember is that policies are not all the same. The company offering the cheapest deal may not necessarily provide the level of cover you need.

A specialist with access to bespoke Insurance policies will be able to offer more information and provide a quotation to appropriately protect your RMC.

CLICK HERE to get a free, no obligation quote

Belinda Thorpe - Residentsline Managing Drirector

belinda@residentsline.co.uk

01902 795085

www.residentsline.co.uk