Blocks of Flats Insurance
Making sure your Buildings and Contents are insured for the correct value is fairly simple and regular checks should be made to make sure that your sums insured are adequate to protect your needs. At Assetsure, we can provide insurance for Purpose Built Blocks of flats, Conversions, Converted Factories, Engineering cover for Lifts and Directors & Officers Liability.
Many insurers are not prepared to provide property insurance for blocks of flats (or buildings split in to Flats). At Assetsure, we are able to provide quotations for Buildings that have be divided up in to Flats and we will consider both owner occupied blocks or blocks that involve an element of letting. Our experience of insuring Flats is that in any one block, you are likely to have a mixture of owner occupied and tenanted, we quote for both. We are quite prepared to accept enquirers for all types of split property, Purpose Built or Conversions. We will even consider converted factory premises etc. Many people approach us for an Individual Flat Quotation, without realizing that their property is already covered. We do not want to waste your time and money, so if you are considering asking us for a quote for an individual flat in a block, you should first check that you cover has not already been arranged for you by a freeholders block policy. If you are just purchasing a Flat, your solicitor or legal adviser should be able you with this. The following notes may help you….
When you purchase a flat you normally purchase it on a leasehold basis, that is to say you are buying the right to occupy your Flat for a set number of years. 99, & 125 years are fairly typical terms. You have rights to use the common parts and usually the garden area if there is one. You do not own the building or the land on which it stands. This is owned by the Freeholder of the Building, at the end of your lease term your Flat will return to him or her. The terms of your lease will outline the Freeholders responsibilities, which will usually include; arranging the insurance which is often billed out to you with your services charges.
Often it is difficult to locate the freeholder of the property and individuals resort to arranging their own covers, this is not the advised way to approach the matter and if at all possible, you should seek to group together with the other leaseholders to arrange a common policy. Many leaseholders are now joining together to form management companies with a view to buying the freehold of the building and thus affording them the right to arrange their own insurances. The government introduced legislation in 1993 giving lessees, if they satisfied certain qualifications, the right to buy their freehold of the block and this is now proving to be most popular.
What Covers are Available? – Buildings insurance will be provided with a similar range of perils, that you would expect to receive under a normal home insurance policy. The wording should satisfy your mortgage lender. Each flat owner should inure there own Contents under their own separate policy. Under the Block of Flats Building policy it is possible to insure communal contents only. If your building contains a lift, you will have a statutory requirement to insure it for a minimum of Inspection only cover. This is usually referred to as Engineering Insurance cover. By purchasing a policy from an insurer, periodical visits will be made by an engineer to make sure that the lift is safe. The report will contain information which you can pass to your maintenance company who can then carry out any necessary work. For insurance purposes, we consider buildings to be classed as blocks of flats if they are in multiple occupation and each unit is self contained. Bedsits or property where there are shared facilities such as the kitchen or bathroom as usually classed as houses in multiple occupation or HMO. With many modern style flats developments, blocks of flats are sometimes mingled with terraced house and perhaps leisure facilities such as a gym. If this is the case, we will need full details but of course will still be able to offer quotations. Tower Blocks can be in towers, converted houses or even old industrial buildings; they are sometimes known as apartment blocks and in some cases may be referred to as MDU which stands for multiple dwelling units.
We can also provide quotations for Directors and Officers public liability insurance cover. This type of contract is becoming very popular with residential management companies. Managing your block can be a time consuming task, almost always unpaid and the majority of people do not realize the difficulties and pitfalls that can arise. Regrettably the law recognizes no basic difference between people running a residential management company and those running a large company with lots of staff. Directors and Managers can be held personally liable for the financial consequences of any of their actions and errors relating to the managing of the building. By purchasing this type of cover, you can obtain protection against claims made personally against you. Many people are now refusing to sit on management committees without this insurance cover being in place.
History of Tower Blocks and Blocks of Flats – Tower blocks as they are known in the United Kingdom, were first constructed at the end of the second world war. German aerial bombing had laid waste many inner city areas and tower blocks were seen by many as a quick fix to housing problems. In general, at this time, the UK housing stock was in poor condition anyway and many slum clearance schemes were initiated to rid the country of crumbling properties with poor or no sanitation. Slums and bomb sites were cleared and in their place, tall flats were constructed. Initially blocks were well received, they were modern and often had excellent views and were popular with people who were used to living in poor quality housing stock. Alas the initial build quality was poor and in time the early tower block became associated with low quality housing and certain areas started to develop social problems relating to ‘high rise’ living. In recent years local authorities have done much to improve blocks of flats and now many have been completely renovated and former council homes are being sold for considerable sums of money. In London many council designed blocks have achieved almost iconic status, in particularly, the Barbican with it’s wonderful views and close proximity to the city and west end now commands vast sums of money whenever apartments do come on to the market.
Because of the social problems often associated with blocks of flats living and the poor build quality, they fell out of favour and hardly any were constructed for a period of 30 years, however they are now becoming popular again and there are many new developments in Britain’s major cities. Flats are popular with young professionals and are seen as the chic’ way to live in a city. Developers have come up with a number of buzz words to help sell flats and words such as ‘Apartments’ or ‘Manhattan Apartments’ or ‘Loft Style’ are much in evidence. Also popular with the young and reasonably wealthy are flats made from former industrial premises, these are seen as having more character and many former brick works, warehouses and even food processing factories have been turned in to high-rise flats. In the major cities any property located by a river or canal is at a premium and these places are seen as very desirable places to live. For landlords flats in blocks represent a way to acquire buy to let property cheaply, and in the main are easier to rent to the younger generation who do not require the same amount of space as families.
Blocks of Flats from converted houses started to become popular in the 1970’s, the buildings themselves in the main had fallen in to disrepair, and the amount of money required for their up keep simply was not available. If you manage to find an old photograph book of London from the 50s you will be amazed at
the poor condition of the houses in many areas which are now considered to be the height of fashion. The demand for these large houses no longer existed but there was a need for smaller style properties as many people moved to the cities in the search of work. These large houses were ripe for conversion particularly and often developers could pick them up for next to nothing. Today many grand old Victorian and Edwardian houses have been converted in to flats, thus aiding the regeneration of city areas. Some large houses are now looking as good if not better than the day when they were originally constructed.
Flats in cities were popular anywhere where space was at a premium and there was a need for housing, other locations that favour this type of development are near hospitals and universities where there is always a need for property for rental purposes. Tower Blocks of course have an economic advantage in areas with high population density and in cities where property prices are generally higher; blocks of flats represent an affordable way for people to get on to the housing ladder. Flats are also popular with landlords in cities as they are cheaper and easier to rent and better suit the needs of a younger more itinerant work force. In contrast with other forms of housing such as low rise homes, flats can accommodate a greater number of inhabitants per unit of land they occupy and can help reduce the cost of local infrastructure.
Scotland has had its love affair with tenement buildings for much longer, during the 19th century tenement buildings become the main type of dwelling house in Scotland’s developing industrial cities, Edinburgh has tenements dating back to the 15th century. Although Glasgow as a city has the greatest density of high rise apartments in the United Kingdom, the traditional Scottish tenement building is of more solid construction. Sandstone and granite were used and the buildings were usually between three and five stories in height. To most people the word tenement is associated with inner city poverty and to this day in many parts of the world this is true. However in Scotland tenement buildings are of excellent quality and when any come on the market for sale, they fetch a high premium.
Assetsure are able to cover all types of flats and in Scotland where the freehold and leasehold laws are a little different, we can also consider individual flats in apartment or tenement blocks. Whilst in the vast majority of the United Kingdom, the freeholder will arrange insurance for the whole building. There are some regional variations, in parts of London or on Tyneside where they have ‘Tyneside’ leases, a more detailed knowledge of blocks of flats insurance is required, if you contact our office, we will be pleased to assist you.
Safety First at Your Block of Flats – In October 2006, new legislation was enacted to help improve fire safety at premises. The new rules and regulations have caused a little confusion for our blocks of flats customers as they were not specifically aimed at residential premises. However with over 40,000 fires a year resulting in hundreds of often unnecessary deaths, fire safety should always be taken seriously. The fire safety laws relate to any person or group that are:-
- responsible for business premises
- an employer or self-employed with business premises
- responsible for a part of a dwelling where that part is solely used for business purposes
- a charity or voluntary organisation
- a contractor with a degree of control over any premises
However, if you dig a little deeper in the requirements you will see that there is legislation that effects the common parts of buildings (flats & maisonettes) although it also suggests that it is not intended for domestic dwellings. We feel this is a little ambiguous but suggest that a responsible member of your blocks of flats management committee be out in charge of fire safety. Failure to make sure that your block of flats is kept clear of hazards could possible lead to a Directors & Officers claim. Implementing a basic Blocks of Flats Fire safety procedure is a good way to start and perhaps a leaflet could be drawn up and passed to all residents of the block. Here are some tips:-
- Make sure you have adequate means of escape from the building and that they are keep free and clear of rubbish.
- Do not allow residents to store items on walkways, landings or escape routes. Remember, these items could catch fire and block an exist.
- Do not allow rubbish to build up near your block of flats or allow combustible materials to be stored in the vicinity.
- Are your escape routes adequately lit?
- Do you have signs that the point to fire exits?
- Do you have a system in place of giving early warning of a fire to all residents?
- Installing fire & smoke alarms at the premises can significantly help improve safety. You will need at least one smoke alarm per floor and they must all communicate with each other
- The detectors should be sited within7.5 meters of all doors to habitable rooms.
- The detectors should be ceiling mounted and at least 300 mm from light fittings.
- Detectors should not be fitted near heaters or air conditioning units.
Additional Covers – if your building is a block of flats, engineering cover is a category of insurance that is sometimes overlooked when requesting blocks of flats insurance. Although this insurance can in it’s simplest form, just be a service not an actual insurance cover, it is often provided by an insurance company who are generally recognised as being competent to provide the service. Your block may contain certain equipment that will have a statutory inspection requirement. If you fail to have this equipment inspection, you will breaking the law and thus arrangements must be made for a competent person to carry out the inspection process.
The most common types of equipment that will need to be inspected include passenger or goods lifts, car parking systems and pressurised boiler systems. Any stair lifts that are fitted to the building will also have to be inspected. By engaging the services of an insurance company to carry out an inspection at your block, you will be obtaining the knowledge and expertise of an organisation that can help you identity all items at the location that require inspecting. Different items need to be inspected at different intervals and on their first visit to the premises, the insurance company surveyor can make a list of the items and schedule dates for return visits.
Within a short period after inspecting your block of flats, a written report will be provided to you which will highlight any faults within the equipment tested and especially, highlight any items that need immediate attention because of safety issues. Not all equipment at your premises will have a statutory requirement but that it is not say it shouldn’t be inspected. Electrical items at the premises can also be inspected and in the main, the insurance company can often include these items in their service (A separate engineer may have to call).
Insurance companies usually calculate their charges for inspections on a per item basis or in some cases, where there are a number of items on a time basis. As the inspection is really a service not insurance, the charge is subject to VAT at the current rate. The roots of engineering insurance go back to 1854 when the Steam Boiler Assurance Company introduced an insurance cover that was combined with an inspection service. This cover over time has been extended and developed so a whole host of other items as well as boilers can be covered.
As well as the inspection service, insurance can be arranged which will cover the items against certain extraneous perils which are not normally covered by a standard material damage policy. These covers are usually referred to as sudden & unforeseen damage and can also include breakdown. If you take out these additional covers, they will be subject to insurance premium tax not VAT.