Insurance Claims Procedures for Block Policy Cover on Residential/ Mixed-Use Schemes

The insurance policy is ultimately there to protect all stakeholders with an interest in the building in the event of total or partial destruction of the property.  However, it is more likely that tenants and agents will face claims resulting from escape of water, which may cause between £500 and £2,500 of resultant damage to the building, on average.  A well drafted all risks building’s insurance policy should cover the trace and access costs of locating the source of the leak and any resultant damage caused by the water ingress, but this will be subject to the excesses and any specific policy exclusions.  It is not usual for the cost of the repair required to rectify the source of the leak to be covered by the insurance policy.  The cost of this repair may have to be funded via the service charge.

There are numerous examples in the market of where poor insurance claims history have elevated levels of policy excesses well into four figure sums.  Effectively, in these circumstances, the tenant may have no recourse to the insurance policy if they suffer water ingress into their apartment and may be considered to be practically un-insured, despite having paid their proportion of the premium!  If this happens, recourse to construction warranties or other similar policies should be considered in partnership with your client.

A good broker should be able to guide landlords and managing agents to a best value policy for a building with an underwriter of repute with robust claims handling procedures, hopefully on reasonable levels of excess.  Remember, cheapest is not always the best option for property insurance, but you will only find out if you are in the unenviable position of having to call on the policy!

Tracy Littlewood – Insurance Claims Administrator, Livingcity