Freeholder Building Insurance

Buildings insurance cover is not a requirement by law but can often be a wise precaution given the huge sums of money invested in a property – especially for a large block of multiple flats. With more residents in the property comes a greater risk of something going wrong and so it makes sense to ensure you’re well protected.

A buildings insurance policy is also usually a requirement of most mortgage lenders.

Cover for both ends of the scale

As well as covering smaller issues like burst pipes and break-ins, freeholder buildings insurance also covers the more catastrophic end of the scale – to protect everyone’s financial investment in the freehold property.

For example, cover to reimburse all parties in case of the complete destruction of the whole building, such as by fire. And cover for alternative accommodation if the property is made uninhabitable and has to be repaired.

Some freeholder insurance policies also include cover for accidental damage – which is damage you or a tenant do to the building – depending on the specific policy wording.

When searching for freehold insurance, it is best to be as specific as possible.

Don’t assume that a standard home insurance policy will fit the bill. It’s not just the extra bedrooms to consider. Freehold properties come with a long list of extra risks and responsibilities.

Freehold properties have lots of unique components which require a specialist, well-thought out insurance policy to make sure you’re as protected as possible. And this will usually be a landlord insurance policy rather than home.

Buildings insurance in England is usually the responsibility of the freeholder, unless specified in the lease. Leaseholders are typically responsible for sorting their own contents cover but not the structure of the building. The leaseholder will normally pay a service charge to the freeholder and this sometimes includes a contribution to the buildings insurance.

Overall, the responsibility of buildings insurance could sit with:

• The freeholder
• A residents’ association or ‘right to manage’ company (where a group of leaseholders group together to take on select responsibilities)
• A managing agent (appointed by the freeholder)

Some examples

In a Victorian terrace the upstairs property may be leased out to another owner while the building remains the property of the freeholder who lives downstairs. In this case the person or people who own the freehold and live downstairs arrange freeholders building insurance for the whole property.

Meanwhile in a block of multiple flats, the freehold may be distributed among the owners who form a property management company. This is often structured so that anyone who buys or sells a property simply joins the company based on shares which is easier than rearranging the lease every time. In this case the legal entity responsible for the freeholders buildings insurance is the management company.

Whoever the freeholder is – an individual, partnership, group or company – it’s that entity who is responsible for arranging the buildings insurance policy for a block.

If your freehold includes properties that are leased out then you need freeholder insurance cover. This is basically a form of landlord insurance that accounts for the fact that you’re not the resident in all the properties. Generally, if you’re  transparent about your situation with your insurer, then they should be able to guide you on the cover that’s appropriate for your situation.

If you’re co-freeholders with other people then you should all be named as joint policyholders on your policy schedule. Joint freeholder building insurance should not be difficult but does require an insurer willing to go the extra mile to get the right policy for you. How do you answer a question about how long you’ve lived there or your claims history if you’re three people? You need a provider willing to pick up the phone and talk to you rather than sending you to a call centre or online form.

No, it isn’t difficult to get freeholder buildings insurance cover if you work with a specialist broker.

It’s true that freehold buildings insurance is not the typical kind of policy you expect to find on a comparison site or from an insurer you see advertised on television. But generally speaking, it’s just a form of landlord insurance, and so you should be able to speak to a few landlord insurance specialists to find the right cover for you.

At Protect My Let, we’ve been helping landlords like you find better cover for your rental homes since 2004. We take it personally – there’s no hard sell, just real people going off-script to find you exclusive deals on your landlord buildings, contents, and liability insurance.

Protect My Let will always endeavour to get you a competitive quote – call us now to see if our insurance is right for you.

While arranging buildings insurance cover for a freehold property should not be much more expensive than standard landlord insurance, the cost of your cover will depend on the property and risks in question.

For example, a block of 50 flats obviously requires more cover and likely holds more risk than a maisonette with only one resident on either floor.

One of the biggest factors in pricing this type of insurance is the rebuild cost of your block. Note that this is not the market value of the property, but the cost of materials and labour that it would cost to reinstate the property if it were totally destroyed.

For that reason, it’s important to get an accurate rebuild value. The most accurate approach would be to get a survey. But an easier method is to use a calculator such as that provided by the Royal Institute of Chartered Surveyors. Nevertheless, it’s up to you to confirm the correct figure to get an accurate quote.

What about outside of rebuild value?

After the rebuild value, other price factors include location, which factors in risks like crime rates and flood risk, and your own personal insurance history. You should also note the occupancy of the flats as well as any inoccupancy. This is because some tenants are deemed lower risk than others, and an unoccupied flat is often deemed a higher risk because an issue like a leak may go unnoticed until more damage is done.

Insurers will price risks in different ways, and this can change over time. For instance, an insurer that has too many high flood risks on its books might want to reduce that number by increasing prices for those risks. On the other hand, an insurer with a well-balanced book might spot an opportunity in the market and look to take on a few higher risk customers.

Therefore, it pays to shop around and consider switching if you’ve been with the same insurer for a number of years. But remember that when arranging buildings insurance, you should never rely on the cheapest provider on a comparison site. This is because these aggregators rarely offer a full view of the market, while brands will scrimp on product features in order to rank top as the cheapest.