Leasehold Management - To Buy Terrorism Insurance Or Not To Buy Terrorism Insurance?

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    Leasehold Management - To Buy Terrorism Insurance Or Not To Buy Terrorism Insurance?

    Does anyone have a view on this?

    The lease wording doesn't explicitly compel the management company to buy terrorism cover. Instead it says that the management company's duty is:

    "...insuring and keeping insured the Building and other structures at all times against all comprehensive risk applicable to a reasonably normal insurance policy covering this type of property in the full re-instatement value and such other risks as the Management Company shall reasonably decide."

    Terrorism cover is proving to be pretty expensive, and the directors are undecided about whether or not they should buy it. Does anyone know if most RMCs do buy this cover, or do they not bother with it more often than not? (excluding of course cases where the lease compels them to buy it, which I believe some do)

    Terrorism cover isn't currently in place and hasn't been for at least the last 6 years, but following a transition from using an external property manager to a self-managed arrangement, we're reviewing all of this stuff with a fresh pair of eyes.

    Thanks

    #2
    We sell a Terrorism Insurance policy for Property Owners. I would be suprised if 1 in 100 people actually ask for it. The "worth it" question is always answered with "Yes" if you need to make a claim (which is obviously unknown until it happens) or if you want peace of mind that you are covered from something like this happening. As most buildings/contents policies now exclude terrorism, this is definitely worth considering but ultimately is down to personal preference.
    Steve Smith - Company Director at a leading Landlord Insurance broker with 20+ years experience in the industry
    LandlordZONE Verified Poster and Topic Expert for Landlords Insurance since 2009
    See my profile for contact details

    Comment


      #3
      I can answer that whereas owners of a single flat might not ask for terrorism cover to be bought back from the Pool insurer, terrorism cover does tend to be bought where blocks are insured through a seasoned managing agents' block policy. The reason is that terrorism is not automatically included on any commercial property insurance policy and hence when the policy extends to include blocks of flats whether one block or dozens, the block policy will by default have terrorism cover on everything albeit that terrorism is typically charged as a separate item of cover as it is bought not from the composite insurer but from Pool Re, a Government set up terrorism insurance scheme which was put into operation when the major insurers excluded terrorism cover about twenty five years ago

      Comment


        #4
        If the building is damaged by any act of terrorism and there is no insurance cover, the building cannot be repaired or re-instated.

        Any outstanding mortgage loans still have to be repaid by the leaseholders. So buying insurance cover for terrorism is a MUST have or the directors of the management company may be sued and put at risk of bankruptcy .

        Its not an option. The mortgage loan offer to new buyer is subject to the property being fully insured.

        Comment


          #5
          Agreed, but also get good quality legal cover.

          Comment

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