It would be fair to say that taking over the freehold of a property is no easy task. It requires a great deal of planning, with many legal and technical issues to address along the way. And once formed, there are many responsibilities that the new freehold company takes on. One that’s often overlooked, but so incredibly important, is insurance.
A quick whistle-stop tour through the types of cover you need reveals there’s plenty to think about. Let’s start with the insurance for the building itself. It’s really essential that you insure for the full rebuilding cost value, and not its current market value. And, although residents need their own contents insurance, the building will need communal contents insurance for shared areas that normally include furniture, carpets and curtains.
An often-overlooked cover is plant inspection and breakdown insurance, a policy that includes such things as engineering insurance should a lift breakdown. Any building with lifts will need to comply with the statutory requirements for inspection and maintenance.
As crucial as these are, there are also key liability policies that are just as vital to have in place. Employer’s liability is essential where staff, such as gardeners, concierge or caretakers, are employed. Property Owner’s liability protects you against injury, damage, or death to third party individuals on or around the property, such as postmen, meter readers or council employees.
And finally, there’s Directors’ and Officers’ liability. Alas, the law does not differentiate between the director of a freehold company and one running a commercial business. Actions of freehold directors can have a real impact on other residents and they can face unlimited liability if they get things wrong. So, having protection is a must.
Tom Russo, Property Insurance Specialist at Kerry London Insurance Brokers