Joint freeholder building insurance is the arrangement where two or more people hold the freehold directly rather than through a company. It works, and it is administratively fragile: the insured is a list of individuals, and every time that list changes the policy has to change with it.
Name everyone
An insurer indemnifies the named insured. A policy naming one of three joint freeholders may pay only that person's interest, which is not a theoretical problem when a roof falls in. All the freeholders should appear on the schedule, and leaseholders' and mortgagees' interests noted where the leases require.
What happens when one sells
The list of insureds changes on completion and the policy has to be endorsed. Conveyancers ask for the policy and will notice a stale one. Building the endorsement into the conveyancing checklist is easier than remembering, and it is the step most often missed in buildings with no managing agent.
Whether to incorporate
Where flats change hands regularly, a company holding the freehold is usually worth the effort: it survives sales and deaths, can hold a bank account for the reserve fund, can be insured as one insured, and gives the volunteers running it the protection of directors cover. Setting one up is a conveyancing job rather than an insurance one.
Questions people ask about joint freeholder building insurance
Should every freeholder be on the policy?
Yes. An insurer indemnifies the named insured, and an unnamed joint freeholder risks only a share being paid.
What happens when a flat is sold?
The insured list changes and the policy must be endorsed on completion. Put it on the conveyancing checklist.
Is a company better than joint names?
Where flats change hands often, usually. It survives sales, can hold money and documents, and allows directors cover for the volunteers.