A guide to the different types of block and estate insurances

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By Alan Draper | Jul 2023

Residential Buildings Insurance

Residential Buildings Insurance is for landlords that own – unsurprisingly – entire blocks of flats. The policy will provide comprehensive cover for the entire building, factoring in that the flats will either be leased or rented out by the freeholder. Block of flats insurance doesn’t just refer to residential blocks – cover can be provided for commercial tenants as well as maisonettes or houses that have been converted into flats.

Policies are wide and varied in their scope of cover but a good Residential Buildings Insurance cover should include the following cover

“All Risks” cover (including subsidence)
Employers Liability Insurance
Public and Property Owners Liability cover
Lessees fixtures and improvements
Alternative Accommodation or Loss of Rent
Loss or unauthorised use of Metered Utilities (Water)
Cost of tracing leakage of oil or water
Loss of or Damage to contents in communal areas
Damage to underground Pipes and Cables
Unrestricted cover on vacant or rented flats or apartments
Machinery break down
Damage to fixed glass, shower trays and sanitary fittings
Storm damage to fences and gates
Legal expenses
Replacement of communal door locks following theft of keys
Personal accident cover for voluntary workers
Fidelity guarantee

Most residential buildings insurance policies have excesses and the excess for all other damage is usually negotiable. Freeholders/RMC directors should always check that the description of the property insured is accurate and includes cover for the outbuildings, gates, fences and underground pipes and cables that the Freeholder/RMC is responsible for insuring. Also, most policies are index linked to ensure the sums insured remain adequate – do confirm with your insurer that this is the case.

Contents Insurance

Whilst the “block” buildings insurance will cover the building, the contents of flats are generally not covered by the block buildings insurance. Please note, if you rent out your flat, you will need a specialist landlord policy. A general contents policy will not be fit for purpose.

Property owners’ liability

Any person or company who owns or uses property has a legal duty to provide a safe environment for visitors and any other person legally on the premises – visitors, contractors, the postman. If you fail in this duty of care the residential management company could be held legally liable for the injury resulting in huge costs and damages being awarded against you. Property owners’ liability will protect you against these costs. This type of claim is, in fact, quite common. We often see claims for such things as tripping on cracked pavements, slipping on wet floors, and even apparently small injuries can result in claims well over £1,000. It’s also worth noting that if you are insured, the insurers will pay to defend you against spurious claims. Did you know… you can be held liable if a trespasser or burglar hurts themselves whilst illegally on your property!


Employers’ liability insurance

It is the law that if you employ anyone you must have insurance to cover your legal liability for injury they sustain caused whilst they are working for you. (Employers Liability Compulsory Insurance Act 1969). For a person to be considered an employee it is not necessary for there to be a formal contract of employment in place. You may only use casual labour, such as a gardener once or twice a week in the summer, but they are still employees. Also if the Residents Association is a legal entity the directors and officers though not paid would be deemed an employee so cover must be arranged. But even if it was not a legal requirement to arrange this insurance, we would still recommend you buy this cover. A serious injury could result in damages and legal costs running into hundreds of thousands of pounds, and if you are not insured you are still liable for these potentially huge costs.


Directors’ and officers’ liability cover

When you agree to act for a residential management company in a formal capacity as a director (or on an informal basis as a committee member), under company law you are treated no differently to a director of a major PLC. So if you, or your fellow directors, make an innocent error or fail to do something you should, you can be held personally liable for the financial consequences. This insurance protects you financially as the insurers will defend you if possible, and if not, pay the legal costs and damages awarded. The cost for this cover is relatively small and we always recommend this cover is arranged. We suggest you make it a condition of becoming a director that this cover is purchased.


Terrorism Insurance

For insurance purposes blocks of flats are treated as commercial premises. Unlike most household policies, it will not usually include cover for terrorism and you have to request it (usually at an additional premium).

When deciding whether to purchases terrorism insurance, you need to consider the following;

  • Does your lease require it? Older, pre-1990s leases may not mention it specifically, but if there is a requirement for full or comprehensive cover, or similar, it may be deemed as expected
  •  If you have a mortgage on the property your lender may insist on it.
  •  Other considerations when determining risk;
    • Could another resident be targeted due to their occupation.
    • Terrorism could include animal rights and environmental activists
    • Your block may not be the target, but another flat in the block could be used to make and/or transport a bomb to its target
    • There is a higher perceived risk in built-up areas.


Engineering Insurance Policies

The purpose of an inspection is to make sure the equipment is safe, it does not replace maintenance. An examination by a qualified inspector will:

Detect defects and weaknesses

Ensure the safety and continued use of the equipment

Be sufficiently independent and impartial to allow objective decisions to be made

Inspections are necessary for equipment where there are significant health and safety risks (H&S) as a result of incorrect installation, reinstallation and deterioration. Regular inspection can prevent potential hazards, save money and ensure compliance with UK H&S laws.

Machinery and plant all have varying inspection periods, depending on the type of equipment and includes items such as lifting equipment, boilers and electrical installations.

Details of legal requirements for inspection of systems is covered in the section “Insurance and the law”


Lifting equipment

Passenger lifts – Inspected: 6 months

It is a legal requirement for lifts to be inspected by an independent competent person. Inspections should not be carried out by the same person responsible for maintenance due to conflict of interest. Be aware that a maintenance plan may not include all statutory inspection requirements. Keep a record of inspections and a copy of the inspection certificates with your insurance documents. To help comply with the 1998 ‘Lifting Operations and Lifting Equipment Regulations’ (LOLER), insurers offer a stand alone inspection service, separate to an Engineering Insurance policy.

Lift Car Guide Rail – Inspected: 12 months

Examination of the lift car guide rail in the shaft is essential. If faulty the lift could list, causing extensive damage and harming anyone inside.

Goods lifts – Inspected: 12 months

Goods lifts are for carrying goods only and should never be used to carry people. Falling lifts and trapped limbs are among the most common risks.

Hot water Boilers

Hot water boilers – Inspected: 24 months
Hot water boilers keep the water temperature below 100ºC and typically provide heating of water for domestic and commercial use.

Pressurised hot water boilers – Inspected: 14 months.
They are susceptible to corrosion and fatigue caused by excessive scale in the system.

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