Massive Insurance increase

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  • Massive Insurance increase

    We applied to the LVT for the appointment of a manager.

    The manager is now arranging the buildings insurance and has advised that the premium will be around £8,000 the freeholder used to to have it on his block policy and we paid £2,000.

    The manager appointed by the LVT has advised that the claims history on our block is very bad with a subsidence claim and a number of large water damage claims and a break in. Also a vistor to the block fell and the insurers paid around £25,000 in personal injury claim. The claims appartently total £70,000 over the last four years. The manager has asked teh freeholder if he will still carry the property on his block policy but he has refused to help.

    What steps can we take to force the freeholder to insure his building, he must surley have to help us in such a situation

  • #2
    Maybe apply to the LVT to dis-instruct the manager?

    Comment


    • #3
      Any application for insurance will have to declare claims total
      £70,000 over the last four years, which will put up the price.

      Also, compare like for like.
      Surly you are ableto talk face to face with the manager, and put
      your views for cheaper insurance, but past £ 70000 claims is going
      to bump up insurance quotes.

      Comment


      • #4
        Looking at it from the insurers point of view what is attractive about this risk?.....nothing at all.

        The manager has probably done the best he can with a depressing piece of business. It is not just the amount of the claims but the number. One claim of £70k for say fire would not necessarily make it uninsurable but it is the number of claims which make an underwriter very disinterested in a property. If there is a culture of always wanting to claim an insurer is never going to make a surplus from the policy

        I think you need to consider taking legal advice from the organisation/solicitors who advised you to go down this route of appointment of a manager. However the legal costs could be substantial and it may be cheaper to pay the premium. Before blaming the manager, do try and get quotes based of course on the claims history. I have a feeling that the block is almost uninsurable unless certain risks are not covered. The only good news is that if there are no claims after three/four years these will no longer blight the property. The subsidence claim will cast a shadow for some time but it should be possible to get cover if you can produce an engineers report that the property is stable. If the engineers report is unfavourable then the claim for the subsidence needs to be reopened, for this you will not need the freeholders consent

        Comment


        • #5
          You can't really have your cake and eat it.

          You wanted the freeholders duties, which includes insuring, removed to a third party and this is a price of that, and perhaps ought to have been considered prior to appointment.

          The freeholder has absolutely no obligation as a result and is probably having a good chuckle at your expense I am sorry to say.
          Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

          Comment


          • #6
            Some interesting points, many (including me) would like to be rid of their freeholder for various reaons, a main one being the huge cost of insurance, many leaseholders asume they can get insurance for a fraction of the cost charged by freeholders on their block policies but perhaps that isnt always the case !

            Andy
            Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

            I do not accept any liability to you in relation to the advice given.

            It is always recommended you seek further advice from a solicitor or legal expert.

            Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

            Comment


            • #7
              Originally posted by andydd View Post
              leaseholders asume they can get insurance for
              a fraction of the cost charged by freeholders on their block policies
              but perhaps that isnt always the case !Andy
              Correct, but when leasholdrs askfor aquote, the dont know about
              every claim that has been made, and why should they.
              So a very competative quite comes in - minus the oncost for
              previous claims.

              Some larger managing agents get massive discounts, which are not
              given to a freeholder.
              We sacked our managing agent, and insited we receive a similar
              discount.
              I said if you dont give us a price similar than what you gave our
              managing agent, we will not continue with our insurance with you.

              We saved £ 300 per year, for last 3 years with the smame insurance
              company that was used by the managing agent,.

              R.a.M.

              Comment


              • #8
                This isn't about commission, it's about the absorption of risk across a large portfolio. An advantage which the OP appears to have lost.

                Comment


                • #9
                  Although this advantage appears (in a lot of cases) to have been lost.

                  I follow with interest my freeholder and especially decisions made at the Eastern LVT (normally by Bruce Eddington) where he has reduced insurance by upto 50% and more in recent cases.

                  My freeholder has now begun to admit that there are no economies of scale and block insurance is in fact more expensive. (There is an added on 19% commission or claims handling fee which has recently been ruled unlawfull due to non FSA membership), but even taking off this amount still leaves costly insurance.

                  To moral of this thread is to get a valid insurance quote before going down the RTM/Appointment road.

                  Andy
                  Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                  I do not accept any liability to you in relation to the advice given.

                  It is always recommended you seek further advice from a solicitor or legal expert.

                  Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                  Comment


                  • #10
                    I think there are no (or maybe only very small) economies of scale when you compare what you pay for a portfolio policy to what you might pay if you insure separately - but individual high claim blocks can benefit to the detriment of the less risky blocks within a portfolio. I don't actually think that's right either, and a couple of decisions hint at that I think.

                    Comment


                    • #11
                      Yes that's right it becomes murkier when insurance is bought via a broker on their "block" policy where the terms are harder to establish. What is the difference in a landlord insuring with an insurer with a block policy and they, or a one off client, buying it from a broker- both spread loss/profit across the policy.

                      It boils down to given a clear claims history and assessment of current risks, what can be shown to be sensible terms and premium.
                      Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                      Comment


                      • #12
                        The freeholder has told the manager of our block he will keep it on his block policy ( I suspect they get commission). The premium will be neatly £4,000.

                        Inorder to ensure the freeholder hs getting the best deal on their block
                        Policy can we insist on seeing details of the other risks that are put on the same policy so we can see if we can get a better rate.

                        The manager seems keen to accept the landlords offer provided the policy is issued in the name of the manager and the freeholder. The freeholder says he wil only allow the interest of the manager to be noted on the policy.

                        Any thoughts

                        Comment


                        • #13
                          The section 30A request can be served on the manager and the landlord to get the summary and in due the course the policy but the manager ought to check with the LVT chair for authority to insure in this way, unless they simply place, as manager, insurance with the landlord or landlords broker, as long as whichever of them is FSA registered.

                          I would check that mortgagees are happy about restrictions noting of interest on the policy. Similarly do not overlook that the correct value is placed on the property.

                          As to commission well the possible opportunity to challenge is there, but given the disparity in the premiums, I am tempted to comment " what does the Meshugina want, blood?"
                          Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                          Comment


                          • #14
                            Gift horses and mouths spring to mind.

                            Comment


                            • #15
                              Thanks for your input but it looks as of the business will have to go on the freeholders block policy it seems totally wrong that he should gain a financial advantage from a run of bad luck effecting our property. Because of the appointment of a manger we accept the freeholder does not have to step in

                              I believe he could be getting around 20% commission for simply having it on his block policy i.e. he stands to make 20% on £4,000 = £800. It would be reasonable for him to get something for having the advantage of being able to get us cover but £800 is totally out of all proportion considering he has not got to do more than a few minutes work. What do you think would be reasonable bearing in mind that he should not get anything as he is not FSA registered

                              Comment

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