Challenging high building insurance premium

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    Challenging high building insurance premium

    Dear all,

    I have used this forum many times over the last 10 years and always received invaluable insight/advice on all my queries.

    I hope someone will be able to point me to the right direction this time, as well.

    We live in a small block containing 9 flats. Freeholder owns building but we have a RMC in place.

    We have recently tried to challenge our high building insurance premium and put forward 3 alternative building insurance proposals as we felt we were paying double compared to the current rate for building insurance.

    We currently pay £5100/year but all the alternative ''like for like'' quotes came in half as much as the current premium. We have never had any insurance claim being made in the building.

    Our Lease says Freeholder is responsible for arranging the building insurance however, it doesn't say Leaseholders must use the insurance company nominated by the Freeholder.

    We know that Section 30A of LRA 1985 gives the right to us, Leaseholders to challenge the FH's insurance choice and that we could potentially make an application to the LVT (on our own costs).

    Our Property Manager forwarded our query to the appointed insurance brokers (Lorica) who wrote back the following:

    ''As this is not a single standalone property but part of a large portfolio insured by the Freeholder under the terms of lease the freeholder has the obligation to arrange the insurance not the leaseholder. The insurance is required to be arranged on a large portfolio basis and in accordance with the demands and needs of the policyholder (freeholder). The insurance cannot be compared on a like for like basis to a standalone quotation as this does not provide adequate cover. Furthermore, there are terms and conditions that apply to individual quotes which could not reasonably apply to a large property owner in order to comply with their obligations under the terms of lease. The policy covering this address is reviewed regularly to ensure the best terms are available based on the cover required therefore the policy is flagged to be referred into the underwriters in good time for renewal this year, on 24 December 2017.''

    My questions are the following:

    1, Do we have to be part of this insurance portfolio or we can leave/challenge it on grounds of our current premium being excessive?
    2, Can it be true that a standalone insurance would not provide adequate cover?
    3, Is it worth taking it to the LVT? Do we have the chance winning the case?

    Any advice would be much appreciated

    Many thanks in advance


    By portfolio, I assume they mean the 9 flats.

    You would be unlikely to be able to get building insurance for just one flat, in isolation.

    The freeholder must obtain the insurance.

    As well as including communal areas, the policy probably includes some provisions for tolerating breaches of the conditions that the freeholder does not know about, whereas a single property policy would be voided if any of the conditions were breached.


      You say you are an R.M.C.
      R.M.C's usually own the freehold ( the 9 leaseholders have a share certificate in the RMC company ) then you will have Directors - normally some of the leaseholders

      Or are you a R.T.M. ( Right to manage on behalf of the freeholder )
      An RMC IS the freholder.

      If you are an R.M.C you can get insurance quotes fro anyone, and instruct your agent to use them.

      so which are you, R.M.C or R.T.M. ?


        Some RMCs own the freehold, others don't. There was, apparently a fashion, in recent times, for three party leases, where the freeholder retained the easy money of the ground rent, but the difficult parts were hived off onto an RMC. If this is a three party lease, the freeholder could retain the insurance, although I'm not sure why a lease would have been set up that way, given that arranging insurance is a lot more work than collecting ground rent.


          Is this our old friends Stagnates & Met Enema? Go to the FTT IIWY.


            £5k sounds extortionate nonetheless. Expect the broker is coining it on this one and there's a kickback to the owner factored in. Happy to offer some advice on this if you'd like a chat (01424 205009).


              £5,000 is extortionate for one flat, but within the range of possibilities for 9. I assumed that the figure was for the nine.

              (Also, as noted in other threads, one way of artificially lowering costs is by having very large excesses. You need to consider the excesses, as well as the premiums.)


                You have to make a written request ( by registered post for proof of date ) for a summary of insured cover for your block of flats and you should get this within 30 days or failure to comply the freeholder commits a criminal offence.

                The summary of insured cover will give details of your building cover including declared value , insured value , public liability , employee liabiity etc policy starting date and policy holder ( and if interests of leaseholders are noted) and insuring company .

                Then you use the summary to get 3 quotes for identical insured cover. Must be like for like . from other broker/ insurance companies

                Then you make application to FTT for judging reasonableness of the insurance premiums with your quotes for same cover and ask for reduction for this year and past years.

                If your quotes are not for same level of insured cover, the Tribunal at FTT will NOT make any comparison of the quotes you have obtained and you have lost your fee going to the FTT. .


                  Thank you all for your replies.

                  We are an RMC but without owning the freehold. The situation is exactly what leaseholder64 described i.e. we have a three party lease and Freeholder retained the insurance. What I have collected from your replies is that we have 2 options : either buy the freehold and then do whatever we want with the insurance, or collect 3 like for like insurances and challenge our current one at the LVT.

                  Thanks again for looking into this, your advice is much appreciated



                    I act for a client who has a flat within a block in Deals Gateway , the Insurance was placed by Marsh Limited with Sun Alliance , the total premiums amount to £33547 per annum on a buildings and all risks policy for 24,320,000. I am sure that there are numerous General Ins specialists who have access to this company and others. The commission and renewals are indeed significant and any broker wanting to secure such business can opt for a lower % of commission. Hope this helps


                      I bet the wording in your lease does not say your building must be insured under a "multi-block policy".

                      If you have exactly "like for like" quotations ( same declared building value, same insured value , same public liability, same employee liability etc and they are lower quotations, you can ask the broker to declare how much commission is paid to the freeholder under the policy . The broker has to disclose the commission to you or you can make a complaint to the FCA and get the broker struck off.

                      If you want to reduce the buildings insurance cost, you should make application to FTT ( replaces the previous LVT ) for a judgement on the reasonableness of the charge for the current year and previous years.


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