Are you a leaseholder landlord? Are you sure you have adequate insurance cover?
There seems to be a grey area when it comes to insuring blocks of flats and individual flats, and not a few leaseholder landlords come unstuck.
What all leaseholders need
The problem is that many leaseholders believe that as their freeholder is responsible for insuring the building, they don’t need insurance cover. But this is a big mistake.
You may not need to insure the structure of the building but (subject to what is set out in your lease) you will normally still need insurance cover for:
- Carpets (and other flooring), and curtains,
- Fixtures and Fittings (including kitchen and bathroom cabinets)
- White Goods (e.g. ovens, fridges, washing machines)
- Furniture and furnishings, plus
- Liability insurance to cover potential claims against you by your tenant.
Replacing all of these items can come to quite a large sum if they are, for example, damaged by fire.
Many insurance brokers, for example, Alan Boswell Group, will offer a landlord’s contents policy which will cover you for this type of thing. If you rent out a leasehold property – make sure you have one.
You can find out more about the Alan Boswell Group policies here.
Insuring the building
If you are the Freeholder of a block of flats in England then you are normally responsible for insuring the building.
There are exceptions to the rule,. For instance, in Scotland, the Leaseholder of a flat can insure the flat under buildings cover. In England, this is down to the Freeholder.
The Leaseholder then usually pays a ground rent or service charge to the Freeholder.
But if you are a leaseholder, don’t count on this. There are cases in England where it is written into the contract between the Freeholder and Leaseholder that the Leaseholder must insure their part of the building.
As such, you need to know whether your lease requires this, and then if it does, make sure your insurance covers it. Your insurance broker or advisor will be able to get suitable cover for you – but you need to tell them!
Don’t get caught out
The trouble is that you often don’t find out you need a certain insurance cover until something goes wrong and you need to make a claim. Only to find that you can’t.
There have been many cases where landlords have lost thousands of pounds through not realising they needed to insure the fixtures and fittings of a rented flat and then being unable to claim for (for example) damage to expensive fitted kitchen cupboards and flooring. Don’t assume that these things are covered by your contents insurance.
If you are a leaseholder landlord you should always check your lease to see if there are any special insurance requirements and then discuss your insurance needs with a specialist landlord’s insurance adviser.
Only then can you be sure that if disaster strikes, you will be properly covered by your insurance.
With thanks to Leah Mayes of Alan Boswell Group for her help in preparing this post.
