Buildings Insurance and noting an interest

[heathcliff]

Hi, I am the freeholder for a converted house split into 6 flats and I organise the buildings insurance for the entire property. As per the leases I charge each leaseholder a proportionate amount of the buildings insurance premium. I also supply them with details of the policy number, period covered, insurers details and specified perils. Do I have to note any individual leaseholder/mortgage lender interests on the policy as one of the leaseholders has asked for this. The leases only state that each lessee must "pay a proportionate part of the amount expended in effecting and maintaining the insurance on the building".

I am very confused as any mortgage company must surely be satisfied that the building is insured on production of a valid insurance shedule??

Any help much appreciated.

[jeffrey]

Noting of interests (leaseholders'/mortgagees') is needed only if the insurer's policy wording does not make it unnecessary.

[heathcliff]

sorry to be rather dim but how do I know what the policy wording should be then??!

[jeffrey]

sorry to be rather dim but how do I know what the policy wording should be then??!

Er, could you not read it perhaps? Duh!

[heathcliff]

Third party interest on the policy is listed as myself, the insurer. Do I have to add all the leaseholder names and their mortgage company details then? I don't want to do this because surely it means one difficult individual could hold up a claim under the policy by another leaseholder and I can only see it leading to problems.

I guess I am asking if I have to note an individual interest if they have asked for it

[Poppy]

If the lease does not specify that interested parties need to be noted on the insurance, then they don’t need to be noted on the insurance.

If the insurance policy does not specify that the interested parties need to be noted on the insurance, then they don’t need to be noted on the insurance.

If the freeholder chooses to voluntarily note the interested parties (lessees and mortgagees) on the insurance, then that is the freeholder’s choice. It doesn’t cost anything and it’s good practice in my opinion.

You need to read the lease and your current buildings insurance policy and comply as necessary.

[easilyamused]

All you need to ask yourself is "do the leaseholders have a financial interest in the property?" If they do not own part of the building then they do not and don't need to be noted on the insurance policy.

In the event that the worst happens their own contents policies (providing they have them) will arrange for alternative accomodation.

[Poppy]

The freeholder needs something to base their decision on. That’s why I suggest that the lease and insurance policy are better than asking oneself.

Are you a freeholder or connected to the insurance industry out of interest?

[easilyamused]

I'm in the insurance industry, riveting as it is

[Poppy]

Will your answer change when I tell you that my leases state that the freeholder must note lessees as interested parties on the buildings insurance?

[easilyamused]

Will your answer change when I tell you that my leases state that the freeholder must note lessees as interested parties on the buildings insurance?

Not really

I don't see any point in adding a lessee as a third party interest.

There is nothing stopping these people being added it just doesn't seem to have any relevance.


Could I ask why your leases include this? purely out of curiosity.

[Poppy]

I am assuming that most leases contained such a clause. I don’t know about leases created today.

[easilyamused]

To be completely honest its not something I've ever considered before, may be worth having a look into this....

[jeffrey]

To be completely honest its not something I've ever considered before, may be worth having a look into this....

Possible reason (akin to Notice of Transfer served by an incoming leaseholder): so that the Insurance Company will not be free to terminate cover, even if F requests, without consent from (or at least without having first warned) those whose interests are noted.

[Lawcruncher]

I think that most block policies these days have a "general endorsement" on them to the effect that the interest of all tenants and their mortgagees is noted. Look to see if the policy has such an endorsement.