Share of freehold buildings insurance is the one arrangement where the people paying for the cover are the people choosing it. The flat owners jointly own the freehold, usually through a company they are the directors of, and that company insures the building. It removes the usual complaint about block insurance, that somebody else arranged it, and replaces it with a quieter problem: if nobody takes responsibility, nobody does.
Who the insured actually is
Normally the company that holds the freehold, with the leaseholders' and any mortgagees' interests noted. Where the freehold is held by the individuals as joint tenants rather than through a company, all of them are the insured. Getting this right matters at claim time and it is the sort of detail that gets carried forward incorrectly for years after a purchase.
What the lease still requires
Owning the freehold does not switch off the leases. They still specify the perils, the basis of the sum insured and the recovery of the premium through the service charge. A share of freehold building that stops keeping service charge accounts, or that insures more narrowly than the leases require, is creating a problem for the next sale rather than saving money today.
The decisions the owners have to make between them
Who arranges the renewal and when. Who holds the documents. Whether to commission a reinstatement cost assessment and how often. What liability limit to buy for the common parts. Whether to include terrorism, which lenders increasingly expect. Whether to insure the directors of the company, which protects the neighbours who volunteered. None of these is difficult and all of them need somebody's name against them.
The sum insured, which nobody owns by default
This is where share of freehold buildings drift. There is no managing agent to commission a valuation and no freeholder with a duty to do it. The figure gets index linked from whatever it was when the building was converted, and twenty years later it is badly short. One professional assessment resets it and is the best money the company spends.
Questions people ask about share of freehold buildings insurance
Who insures a share of freehold building?
The company that holds the freehold, or the individuals where it is held jointly, with leaseholders' and mortgagees' interests noted.
Do the leases still matter if we own the freehold?
Yes. The leases set the perils, the sum insured basis and the service charge recovery, and they still govern until they are varied.
Who decides the sum insured?
The company does, and in practice nobody does unless somebody is given the job. A professional reinstatement assessment every few years is the right answer.
Do we need directors cover?
It protects the flat owners who volunteered as directors of the freehold company against personal claims. It is inexpensive and commonly bought.