Flat / Maisonette Insurance

PEOPLE living in blocks of flats or houses converted into more than one residential unit could have been mis-sold buildings insurance, according to a Kent broker.
Neil Cook of independent brokers Delite Insurance Agency, a member of British Insurers Brokers’ Association (BIBA), has found many flat owners are dual insured and suspects many policyholders could have been misled.
Dual insurance occurs when a policy holder is paying for two types of cover when they only need one AND CAN ALSO APPLY WHEN THEY HAVE BEEN SOLD COVER FOR BUILDING OF THEIR INDIVIDUAL FLAT.

The reason this mostly affects flat owners is although blocks of residences can be classed as a single unit and can be covered with just one policy, insurers still offer individual policies for each individual flat. Typically the freeholder will have a policy covering the whole building and this is usually included in the service charge. As many as 10 per cent of the population could be affected and possibly more, according to Neil.

Neil explains: "I have been seeing clients with dual cover for around 10 years but up until recently it was only about one case per year. A client who lived in a block of eight flats came to me once and each unit had separate insurance.
"Also when my wife was in the process of remortgaging she was persuaded to take cover, when she already had it.
"Problems are also arising when a lender knows a building is insured – this will have been clarified before a mortgage was finalised – but still offers a borrower insurance. The crux is they are trying to take money when they don’t have to.

“This can be confusing."
Eight separate policy holders may be paying between £200 and £300 a year but a freeholder’s policy for the whole building may be proportionally half this amount "If the freeholder has not taken out an individual policy to cover the housing block, the first step is to approach them to see if this can be arranged.

"Failing that, residents should club together and form their own resident’s association and take out a policy in the name of, for example, 123 The Avenue."
Neil says paying to form a limited company is not necessary, becoming an association will suffice and is free.
"This document must also prove the interest of the freeholder, acknowledging they own the freehold, as a note to whoever owns the property and the names of the lenders.

"This is to show the current insurable legal interest, as insurance is a condition of mortgage." A key reason residents who do not club together encounter problems is because insurance company computers only recognise a single name for the policy and will not accept multiple names such as Mr Smith, Mrs Jones and Ms French.
Neil says unmarried couples commonly experience difficulty gaining joint policies because of this.

He said: "Modern brokering is very computer-focused. If the computer rejects the information, the policy is often rejected too.

"It is typically direct insurers who do not sell covers for blocks of flats but are happy to issue policies for individual units, as these systems are geared towards a single name. Mr/Mrs Smith for example, policies only."
"People just don’t realise this is happening. Hopefully they will and action will be taken." against the wrong doers.