Whether you live in a converted house or purpose built flats, it is essential that you have a communal insurance policy for the building.
As a flat owner (leaseholder) you need to insure your contents but you cannot insure a flat within an overall building for repairs or renewals. If you are not certain about your insurance it is well worth asking your management company for sight of the policy.
For managed properties, the building insurance is usually the biggest single annual expense. Typically, for a Georgian Townhouse it will have a total cost in excess of £1,000 per annum.
Naturally, there is a desire to get the cheapest policy, but be careful! More important than cheapness is ensuring you have the correct policy for your type of property. The consequences of a poorly selected policy only becomes apparent when a claim has to be made.
Key factors to be aware of are making sure that the property is correctly valued; special factors such as Listed Building status; any claims history the building may have. All of these things will influence the eventual price of the policy and must be declared completely. Subsidence is also becoming very important.
How can best value be obtained? Essential to the process is a good insurance broker who understands the market. There are usually insurance companies that specialise in particular types of properties and the broker will know who to approach. Don’t be afraid if the eventual insurer is not a household name.
Depending on your funds ask the broker if you can pay for the policy by instalments. It may cost a bit more but can be a great help with smoothing costs if reserves are limited.
PM Property Services works almost exclusively with a broker experienced in our portfolio who we deal with on an almost daily basis. They have a deep relationship with insurers and can often deal directly with claims, speeding up the whole process.
Read the small print! Before accepting the policy check for things like rules on empty flats and maintenance requirements. Can the requirements be met? If you are concerned, discuss with your broker, often clauses can be modified. Don’t ignore and hope it won’t happen. When a claim occurs the insurance company will very carefully check that the policy has been complied with, often rejecting claims, or significantly reducing the claim value if not.
Director’s and Officer’s Insurance. If you are a director of the management company, you should also investigate obtaining Director’s and Officer’s Insurance. This is relatively low cost but protects you in your role as a director of the management company. Again, talk to your broker when taking out the property insurance, they can usually advise and very often bundle a package of insurance to suit you.
Keeping your property revalued. Once your policy is in place you cannot totally relax. An important part of the policy cost calculation is the value of the property. That valuation will change over time, usually upwards and it is important you get a periodic revaluation and advise the insurer accordingly, otherwise any claim may be reduced in the light of an undervalued property.
Insurance is something which seems very expensive for the return you get, however, when the worst happens the competent insurer and the properly selected policy will come very much into its own.