© 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.
A recent ruling in the upper tribunal (lands chamber) has sent shockwaves throughout the insurance community, large freeholders and managing agents. The appeal between Denise Green and 180 Archway Road Management Co Ltd focused on whether insurance premiums are recoverable under a lease, which requires the policy to be issued in the joint names of the Lessor and the Lessee(s).
When the original lease was granted, it was common practice for leases to require an insurance policy to be issued in joint names. There are a number of arguments why this may have been considered appropriate at that time for single dwellings. Logically, then, the policy needed to be issued in the joint names of the Lessor and all the Lessees; yet, by doing so, it is debatable as to whether the lease covenant was being discharged by issuing a policy in this form. In practice, it may not be strictly possible to provide an insurance policy that satisfies this lease requirement.
The judge focused not on the adequacy of the policy but on whether the policy discharged the covenant in the lease. He ruled the insurance premiums could be recovered from the service charge account only in years where the Lessee’s interest had been named and printed directly on the schedule and not in years where the schedule simply stated that a general interest clause applied. General interest clauses have been commonplace in the insurance industry for some years now and are widely accepted as a practical solution towards protecting the interest of Lessees whilst removing excessive and costly administration processes.
The most likely challenge to this ruling will, however, consist of the argument that the lease covenant could never be discharged and that noting an interest, either by means of a specific interest shown on the schedule or a general interest clause, does not constitute a joint insured. If true, the real question remains: how should the insurance cover have been placed? Thankfully, insurance policies have evolved since this lease was written and it could be argued that the use of non-invalidation clauses and subrogation waivers, in a properly formed modern policy, provide better protection than joint insureds; let alone the cost of administering such.
No doubt the implications of this case will be far reaching and the legal profession will kept busy. You could argue that flat owners will ultimately pay the price and this may manifest itself either as defective insurance cover and / or increased costs in administering the policy. Possibly this will also fuel the fire for those that believe the LVT process no longer achieves the objectives it was intended to deliver in terms of Lessee protection.
Paul Robertson is Managing Director of Midway Insurance Services Ltd (Parent company to 1st Sure Ltd)