© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Terrorism Insurance is an increasingly contentious issue in service charge cases. In short, many leaseholders think it is unnecessary and simply serves to increase their service charges (and, potentially, acts as an additional source of commission for landlords, itself a very contentious issue), whereas many landlords think that such insurance is (or should be) mandatory or, at very least, good practice.
In Qdime Ltd v Various Leaseholders at Bath Building (Swindon), the Upper Tribunal was faced with a lease which obliged the landlord to insure against “the usual comprehensive risks in accordance with the [Council of Mortgage Lenders] recommendations...” and which gave a power to insure against such other reasonable risks.
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The landlord had taken out terrorism insurance. The LVT held that there was no need to do so. However, the Upper Tribunal allowed an appeal - it held that the lease obliged the landlord to obtain terrorism insurance. There was a duty to insure in line with the CML guidelines. Those included “explosions” as a usual risk and, on its ordinary meaning, that included explosions caused by terrorism. The obligation was to insure against an event, not any particular way in which it might occur.
If that was wrong, then, in any event, it was perfectly reasonable to obtain terrorism insurance, given the RICS Code strongly suggested that the same should be taken out.
The case will be of great interest to landlords, freehold homeowners and insurance agents. It has now been held that the CML requires terrorism insurance as part of its usual comprehensive risks and a covenant to comply with the CML recommendations is not met unless that insurance is obtained.
In other cases, the Upper Tribunal has clearly endorsed the principle of terrorism insurance as good practice, even if the location of the property might not, to most people, seem to suggest a particular terrorism risk.
Justin Bates is a Barrister at Arden Chambers