What Makes a Good Block of Flats Insurance Policy?

What Sets Block of Flats Apart?

Insuring a block of flats isn't quite like insuring any other property. The risks are more complex, the needs more specific, and the differences between policies — which can look almost identical on paper — more consequential. Getting it right matters, and knowing what to look for can save considerable time, money and stress when it counts most.

Why Most Blocks of Flats Are Insured on a Property Owners Policy

Most Blocks of Flats are written on a Property Owners Policy, and whilst this confuses some people, this is generally the best wording as it fits the requirements for a block of flats, also sometimes called a Real Estate Policy.

Whilst it indicates that you should be the property owner, it is really just made for properties. Whether you are a Property Management Company, a Right to Manage Company, or a Sole Freeholder who owns a whole block of flats, it is usually the best fit.

The Policy Extensions That Make the Difference

The reason is that the Policies contain several extras required specifically for you as a Block of Flats, which are not always catered for under a Commercial Business Policy wording.  These extensions can include

• Alternative Accommodation

• Trace and Access

• Replacement of Keys and Locks

• Concern for Welfare Costs

• Gardening Equipment and Landscaped Grounds

  
  

Why Policy Wording Matters More Than the Sum Insured

Unfortunately, there is no industry standard for Insurance Policies, and whilst on paper you can have the same sum insured and cover, the extensions or frilly bits of the Policy wording are sometimes the most important - especially for a Block of Flats.

Flexibility for Changing Occupancy

Depending on how your building is occupied, you don’t want to be notifying Insurers every time the occupancy changes slightly, so if a flat goes from owner occupied to rented back to owner occupied, it could be an administrative nightmare as the needs would then change as to whether you need Alternative Accommodation (leaseholders) or Loss of Rent (rented properties) therefore a Policy with more flexibility and also where the cover extends for not just alternative accommodation but also to include Loss of Rent is an important consideration.  Checking the cover length for the Alternative Accommodation/Loss of Rent is also important. Over the years we have seen, and there still are, Policies that only give 24 months' alternative accommodation, so if you are a leaseholder in a block of flats and it takes 36 months to rebuild your block, this indemnity period would not be suitable.

Trace and Access: Don't Underestimate the Limit

Trace and access cover can also vary significantly between Policies, with some as little as £5,000. This cover is important under any Policy, but with a block of flats the costs can be considerably more when it comes to tracing a leak, as it could be coming from a shared feed that runs through the whole building or a concealed soil stack.  Add to that what could involve several flats at a time the £5,000 would not always be adequate as it does not just cover finding the leak but also putting everything back in place after it has been fixed and whilst modern technology does make finding leaks easier – it still needs to be fixed so if this falls in a void under a bathroom floor the whole bathroom suite may need to be removed.

Unoccupancy: More Common Than You Might Think

A good-quality block of flats Policy will also have a wide provision for unoccupancy.  Blocks do tend to end up with the odd one unoccupied, and in larger blocks can obviously have more than one.  This means that if the unoccupancy is per flat, you might need to inform Insurers urgently and have terms and increased premiums imposed (depending on the Insurer).  A good Policy will normally allow for 50% or even 75% of the block to become vacant before you need to notify Insurers.  

Your Block of Flats Insurance Checklist

Therefore, if you are looking to insure a block of flats, check the policy for the following:-

• Cover period and sum insured for Loss of Rent/Alternative Accommodation

• Trace and Access Limit

• Unoccupancy Terms

• Make sure that you have had a reinstatement valuation in the last 3 years to ensure that you know how long it will take to rebuild the property and that the sum insured is adequate.  And if this has not been reviewed since before the 2020 COVID-19 Pandemic, this should be a true priority!  

  
  

A final word

Block of flats insurance rewards attention to detail. The headline premium and sum insured are just the starting point — it's the policy wording, the extensions, the limits and the flexibility that determine whether your cover actually works when you need it to. If you're not sure whether your current policy measures up, we're always happy to take a look and give you an honest assessment. That's what we're here for.