This provides insurance cover for the block of flats against a range of perils. These are typically fire, lightning, explosion, impact by aircraft, earthquake, riot/civil commotion, theft, storm, flood, impact by vehicles/animals and escape of water and subsidence. Additional perils can also be covered at additional cost for accidental damage and terrorism if required.
Insurers will generally cover the block of flats on a reinstatement basis which means that they will reinstate the building back to a similar specification to that prior to the insured event occurring. Careful consideration needs to be applied when setting the buildings sum insured and we recommend that you obtain a professional property valuation on the block of flats to ensure that you are fully covered in the event of a claim.
Conditions to look out for:
Many policies that are sold for blocks of flats are, in fact, based on generic property owners’ policies and, the policy wording may not be sufficient to meet your needs. Some of the major areas you should consider include:
- Is the Unoccupancy wording suitable or are flat owners left without cover due to circumstances beyond their control?
- Is the policyholder expected to comply with impractical policy warranties or conditions?
- Types and percentage of types of occupants
- Inspection of unoccupied flats
- Inspection of flat roofs
- Removal and storage of waste
- Illegal cultivation of drugs
- Is the sum for alternative accommodation adequate, taking into account flats of differing sizes?
- Bearing in mind that rebuilding a block of flats can take several years, is there a time limit on the period of indemnity?
- Is loss of rent available to flat owners who have let out their flats as well as to the policyholder?
- Is there a Non-invalidation Clause which prevents the policy being invalidated by circumstances outside the knowledge or control of the policyholder?
Lift Inspection and Breakdown Insurance
If you have a lift within your block you are required by law to have it inspected every 6 months by an approved “competent authority” and hold appropriate reports to confirm. You can buy a policy that covers the inspection element and it is also worth noting that this cover is subject to VAT at the current rate. It is common to cover your lifts against breakdown; this cover can prove to be extremely useful and can also be extended to cover other machinery such as automatic entrance doors and electric gates or barriers.