Block of flats building insurance is arranged once for the whole structure, because a block cannot sensibly be insured flat by flat. Who arranges it is set by the lease rather than by preference, and in most blocks that is the freeholder or a management company acting for them. The premium is then recovered from leaseholders through the service charge, which is why this is one of the few insurance decisions where the buyer and the payer are different people.
What the policy has to cover
The structure, the roof, the common parts, the fixtures that form part of the building, and usually the fixed fittings inside each flat up to a line the lease draws. Property owners liability for anyone injured in the common parts. Loss of rent or alternative accommodation where a flat is uninhabitable after an insured event. Increasingly, terrorism cover, which is standard on larger blocks. Directors and officers style cover where a resident management company runs the block, protecting the volunteers who sit on it.
Who arranges it, and the duties that come with that
Whoever the lease names has a duty to insure on the terms the lease sets and, in practice, to obtain cover at a reasonable cost. Leaseholders have statutory rights to see the policy and the premium, to ask how it was arranged and to challenge an unreasonable service charge. Commission arrangements between managing agents and brokers have been under regulatory scrutiny for exactly this reason, and transparency about them is now expected rather than optional.
Sums insured on a block, which are harder than on a house
The rebuild cost of a block includes demolition and clearance, professional fees, common parts, plant such as lifts and pumps, and the cost of rebuilding to current building regulations rather than to what stands today. A periodic professional reinstatement valuation is the only reliable way to keep it right, and blocks are underinsured far more often than houses because nobody revisits the figure between valuations.
What a leaseholder still has to insure themselves
Contents, including anything fitted since the lease was granted if the lease draws the line that way. Their own liability as an occupier. Loss of rent if they let the flat out, unless the block policy extends to it. Alternative accommodation for themselves where the block policy covers only the rebuild. Reading the demise clause in the lease is the only way to know where the block policy stops.
Questions people ask about block of flats building insurance
Who pays for block of flats buildings insurance?
Leaseholders, through the service charge, in almost every block. The freeholder or management company arranges it and recovers the cost.
Can leaseholders choose the insurer?
Not usually, unless the lease or a right to manage company gives them that power. They can ask how the policy was arranged, see the terms and challenge an unreasonable charge.
Is terrorism cover included?
It is standard on many block policies and an option on others. Mortgage lenders increasingly expect it, so check the schedule rather than assuming.
What if the block is share of freehold?
The company the leaseholders jointly own arranges the policy, which means the leaseholders really do choose the insurer. It also means somebody has to take responsibility for getting the sum insured right.