Individual owners of tenement flats are obliged by law to have adequate common building insurance in place. Not having insurance places a liability on the owner to pay costs for damage to the property from their own funds, even if it’s not their fault. In the current cost of living crisis, insurance may not be at the forefront of an owner’s mind, but it would remiss not to have cover.
Insurance can be both a topical and sensitive issue amongst owners so let’s do a Q&A to simplify the subject and debunk some myths.
Q: I’ve just bought a flat, what insurance do I need and why?
A: Congratulations on buying a flat! There are two types of insurance that you should have. First, you should have a common building insurance policy – either a block/common policy or an individual policy. Having some form of common building insurance is required by law and will also be a condition of your mortgage set by your lender. It covers the costs of major and expensive damage to the building, such as a fire or a building collapse.
Second, although not a legal requirement, it’s recommended to take out contents’ insurance. This will provide cover for repairing or replacing your personal belongings if they are lost, damaged or stolen.
Q: What is the difference between a block/common building policy and an individual policy?
A: A block building policy is generally insurance that covers every owner in the block. An individual policy covers your property but must also cover the common areas of the building.
Q: Our factor arranges insurance, but we don’t know the details, can we ask them?
A: Absolutely! It’s a requirement of the Factors Code of Conduct (Section 5.2) which factors must work to. It says that the factor must provide each owner with clear information on how their share of the insurance premium is calculated, the sum insured, the premium paid, any excesses, the name of the company providing insurance cover and the terms of the policy. This can be supplied as a summary of cover, but full details must be available for inspection for free on request (but you may be charged for paper or electronic copies).
Q: Our building is self-factored, where do we start with knowing the insurance provisions amongst all the owners?
A: If your building is self-factored, first of all, check your title deeds as that will contain information on common insurance obligations – some title deeds require you to have a block/common policy. Once you know that, contact the other owners to inform them of this and ask them to check and provide confirmation that their policy covers the requirements.
Make sure that you have an up-to-date Building Reinstatement Valuation – this is a survey to determine the costs of completely rebuilding the property. This should be carried out every 3-5 years ideally by an RICS qualified surveyor. It will confirm whether you are adequately, over or under-insured, and allow you to take appropriate action.
Q: An owner has refused to provide insurance details and we suspect that they don’t have a policy, what can we do?
A: Every owner has a legal obligation to have common building insurance. If someone doesn’t have this or isn’t providing information, then you request that they provide evidence within 14 days. If they do not do this, you can take legal action using the simple procedure claims action at the Sheriff Court. A Sheriff can order the owner to take out insurance.
Q: What would happen if there was a fire, and one or more owners didn’t have common insurance?
A: If this happened, then all owners would have to pay the costs themselves, whether the owners were at fault or not. This could lead to long delays in the process as people work out how to gather the funds together, whilst everyone is having to move out or potentially sell their property to raise money. It would be hugely stressful trying to make those arrangements whilst being displaced in temporary accommodation long term. The Fire Protection Association estimates that the cost to rebuild a tenement property is over £370,000.
Having the correct insurance cover for your property gives owners peace of mind and avoids costly pay outs. Take the time to check your insurance cover today and don’t get caught out.
For more information or advice, please contact us.
