Whether you own or rent the flat you live in, shopping around for flat insurance is usually a little more complicated than if you’re looking for home cover for a house.
There are several key things to take into account before you start as the type of cover you need largely depends on whether you own the flat on a leasehold or freehold basis, or whether you rent it.
Flat Insurance: Leasehold and freehold
It might appear obvious that when it comes to the contents element, a flat owner, whether a leaseholder or freeholder, only needs to insure the items they own and keep in their own flat, and not anyone else’s. But it’s less clear when it comes to the buildings element, as by the very nature of flat ownership, there are other people involved who own other flats in the building.
Buildings insurance for flats
Buildings insurance is there to financially protect the owners of a property against the effects of, among other things, fire, flooding, subsidence, storm and tree damage, burst pipes and malicious acts.
It’s there to cover you if your home is completely destroyed and needs re-building from scratch, or if it’s partly damaged and needs repairing.
The level of cover you need depends on how much it would cost to re-build the property, not its market value at any given time.
While it’s clear a flat owner has an interest in taking out insurance to cover the immediate structure that constitutes their flat, all flat owners within a building also have an interest in the parts of a building which are commonly owned, such as the external roof, basement areas, sewage and water systems, hallways, garages and other outbuildings, communal garden walls and driveways.
Depending on whether you are a leaseholder or freeholder of your flat, here’s what you need to know with regard to your insurance position:
Buildings insurance for flat leaseholders
If you own the leasehold to your flat, then it means there is another party, usually an individual or a property company, which owns the freehold, which is essentially ‘leasing’ your flat to you. Ordinarily, it is their responsibility, not yours, to provide insurance for the building.
Leases are generally between 80 years and 125 years and extending a lease costs money, which is partly why owning the freehold of a property has value, but it also confers responsibilities on to the freeholder.
- One of the main responsibilities is that it’s the freeholder’s duty to provide buildings insurance.
- Of course, it’s in your interests to make sure they have definitely got buildings insurance in place (and if you have a mortgage, your mortgage issuer requires proof of this) and as such, the freeholder is legally bound to provide you with evidence that this is the case.
- In buildings with more than a couple of flats, it’s common for the building’s management company to arrange the insurance and for you to pay for it as part of the service charge.
- In other instances, the freeholder may arrange buildings cover directly and bill you annually, or again, via a service charge.
- You may want check you’re happy with the terms of the buildings cover policy, so go over the terms and conditions carefully. It’s advisable not to just take the word of the freeholder, or management company, that the policy is fine.
- If you’re not happy with the policy, you can try and get it changed through the Leasehold Valuation Tribunal.
Buildings insurance for flat freeholders
If you own the freehold to your flat, it usually means you also jointly own the freehold to the building that your flat is in with the owners of the other flats in the building (some buildings may have one flat owner who also owns the freehold to the whole building, while the other flats in it are leasehold).
It’s the collective responsibility of all those who jointly own the freehold to sort out buildings insurance. It isn’t a legal requirement that you do, and you can just take out buildings cover for your flat alone if you have a mortgage, but this is somewhat unusual and you might find it hard getting a good home cover deal.
Working with other freeholders
Essentially, it would be better if you could work with the other freeholders to sort cover out for the whole building.
It’s a good idea to form a building committee or management company, if one doesn’t already exist, and arrange for everyone to pay a monthly sum into a fund (commonly known as a ‘sink fund’) to cover the cost of the building’s upkeep, as well as the insurance.
If a building has been converted into a number of self-contained flats or units (which means there are generally fewer, if any, communal parts) joint-insurance might not be possible, in which case your flat would need a separate buildings insurance policy to the other freeholders’ flats.
Contents insurance for both flat freeholders and flat leaseholders
Whether you’re a flat freeholder or leaseholder, you will need contents insurance to protect your possessions against damage, loss and theft.
‘Contents’ aren’t just the obvious items you own, such as smartphones, antiques, jewellery, clothing and furniture, but also include ‘fixtures and fittings’ such as carpets, curtains, cookers, and fridges.
Combined policies are most cost-effective
The most cost-effective way to buy both buildings and contents insurance is together in one individual home insurance policy.
Contents insurance for flat renters
If you rent the flat you live in, you clearly don’t have any particular interest in insuring the structure of the building (the ‘buildings insurance’ element of home insurance). But when it comes to your possessions, you shouldn’t assume that your landlord has insurance for them. In fact, they nearly always won’t.
The cover you need is essentially the same as home and house contents insurance for flat owners, as explained above, and bought in the same way.