Leaseholder buildings insurance

Can I arrange my own building insurance?

No. The council is responsible under the lease for arranging building insurance cover for leaseholders. There is one building insurance policy for all leaseholders, which is in joint names with all leaseholders and the council.

Can the council self-insure?

No, this isn't allowed under the lease. The council cannot afford to self-insure all risks and is not approved by the Financial Conduct Authority (FCA) to be able to do this. The Council of Mortgage Lenders are also unlikely to accept self-insurance so leaseholders would have difficulties buying, selling and re-mortgage their properties.

How do I get the interest of my mortgage providers noted?

If you have a mortgage, your lender will normally ask for its interest in your property to be noted or recorded by the building insurer. The policy contains a clause that automatically notes the interest of all mortgage companies. This means you don’t need to do anything to get your mortgage provider’s interest noted.

What if I sublet my property?

Building insurance cover is still provided by Protector Insurance and there is no need for you to let them know you are subletting.

However, under the conditions of your lease, you must inform Home Ownership Services that you are subletting and complete a registration form. Read more on our subletting your home page.

If you sublet your property, you will not be covered for accidental damage, or “theft or attempted theft” (unless entry to your property was gained by “forcible and violent means”).

We also recommend that you take out a landlord’s insurance policy. This will safeguard your property as well as provide loss of rent protection.

What happens if the property is unoccupied?

If the property is left empty for more than 30 consecutive days (30 days in a row), some of the Insured Risks will be excluded, such as malicious damage, theft or attempted theft, escape of water. See the policy booklet for full details of the exclusions.

You should consider what precautions you could take to minimise the risk of loss or damage to your property if it is unoccupied. For example:

• arranging for milk and any other regular deliveries to be stopped
• making sure sinks are unplugged
• having a friend or trusted neighbour regularly check the property
• maintaining the heating during October to March at 10 degrees centigrade average temperature or draining the heating system.

How is my building insurance charge worked out?

Your charge is worked out using the premium rate multiplied by the insured value of your property. You pay for the building insurance through your annual service charge.

For the year 2023/24 the premium rate is £2.079 (rounded here to 3 decimal places) plus 12% Insurance Premium Tax (IPT) for each £1,000 of the insured value. For example, if the insured value of your home is £150,000 your insurance charge will be:

• premium rate of £2.079
• multiplied by £150,000
• divided by £1000
• = £311.85
• plus 12% IPT

Total amount payable: £349.27 for the year.

How is the insured value worked out?

The insured value of your property is based on the rebuilding cost of the property. Each year the rebuilding cost is amended in line with inflation. This is known as index linking.

The market value of your home has no direct relationship to the rebuilding cost. This is because the cost of rebuilding is made up essentially of the costs of materials and labour, and the location of the property does not generally affect these costs. The rebuilding cost also reflects the fact that there is no need to include the cost of the land on which the property is situated.

Does the council receive any commission in relation to this insurance cover?

No, the council does not receive any commission for this insurance cover.

Why have building insurance costs increased in 2023?

The leasehold insurance market has become much more limited in recent years, mainly as a consequence of the Grenfell tragedy. This has seen a number of major insurers withdrawing from this market including Zurich Municipal, Ocaso and Avid. As a result, local authorities are finding it extremely difficult to find insurers willing to provide cover.

The problem is being reviewed by the Department for Levelling Up, Housing and Communities (DLUHC). The Financial Conduct Authority (FCA) has also flagged issues around the accessibility and affordability of building insurance for leaseholders in a report that you can read here.

Although we only had one bid and it came with a substantial premium increase, we felt it was prudent to accept this and keep your building insured. Our contract with Protector will run for up to five years until 31 March 2028 and we will consider re-tendering the contract within this 
period if the market becomes more competitive. 

Each year we also must increase the property rebuild values in line with building inflation, otherwise we risk underinsuring the properties. Insurers use the Royal Institute of Chartered Surveyors BCIS House rebuilding cost index, which at December 2022 was 19.4%. In previous years this has been around 4% to 8%. 

Did we consider increasing our excesses to help reduce the premiums?

We asked Protector if they would lower their premium rate if we increased our excesses but they would only reduce their premium rate by 2% which was not cost effective.

Can I claim on my building insurance on behalf of my neighbour if I cause damage to their property?

No. You can only claim for damage to your property.

What happens when I have made a claim?

It is important that you keep damaged items and do not throw anything away, as Protector, or their claims handler Sedgwick, may want to inspect them. You will be asked to get at least one competitive estimate for replacement or repair of damaged property.

Protector/Sedgwick will agree the extent and the cost of the required works. Once the works have been carried out and you have presented the invoice to Protector/Sedgwick, they will arrange to pay you, deducting the excess that applies to your claim.

Alternatively, Protector/Sedgwick may be able to instruct a contractor to undertake work as settlement or part settlement of your claim. Protector/Sedgwick will pay the contractors, minus the policy excess that you will normally pay directly to the contractor.

If you have any queries concerning the progress of your claim you can telephone Protector/Sedgwick on 016 1823 1912.

What if I need emergency assistance?

If you have an emergency in relation to an insurance claim and urgently require a tradesman, you can call 016 1823 1912 and they will arrange for an authorised contractor to call and make appropriate repairs.

If the repair is subsequently part of a valid claim, Protector (or their claims handler, Sedgwick) will settle the repair costs directly with the authorised contractor and you will only have to pay the excess to the authorised contractor. However, if the repair is not part of a valid claim, you will be responsible for any fees or costs charged by the authorised contractor.

What is the excess under the policy?

The excess is the amount you have to personally pay towards the cost of a claim.

For subsidence claims, there is an excess of £1,000. However, for each incident of loss or damage, there is a maximum excess of £2,500 in total for the building as a whole. This means your individual excess may be reduced depending on the number of properties in the building affected by the subsidence damage.

The excess for escape of water is £150, and for all other claims you will have to pay the first £100.

Please remember that each individual occurrence of damage is deemed to be one claim. If you report multiple incidents of damage at the same time, these will be treated as a separate claims and a separate excess will apply to each claim.

Do I have to pay an excess if I make a claim even though it is not my fault?

Yes. You are responsible for paying the policy excess even if the damage was caused by someone else, for example an escape of water from a flat above or a motor vehicle hitting your property.

What if I am unhappy with the claim settlement?

Please contact Protector if you are unhappy with your claim settlement. Their complaints procedure is set out in the policy booklet.

If you are not happy with the outcome of Protector’s final decision, you may be able to refer your complaint to the Financial Ombudsman Service.

Please note these answers are for guidance only. We recommend you read the Protector Insurance policy for full details of the exact cover and exclusions of the policy. We also recommend that you take independent advice on issues about your liability or the liability of other residents or the council in relation to particular incidents. The examples given are for possible scenarios. In practice, legal liability has to be established by considering the particular circumstances of the individual case.

What should I do if my property is damaged as a result of a leak?

If the leak is from another property (tenanted or leasehold) you should try to ask your neighbour to stop the leak. If this doesn’t stop the leak, or if it is from a communal part of the building, contact our repairs call centre, Housing Direct, on 080 0694 3344.

We will try to contact the resident that lives in the property where the leak is coming from and ask them to stop the leak. If we cannot contact the resident we have the authority to force entry into the property and carry out the work to stop the leak.

• If the structure or fabric of your flat is damaged you should make a claim under the building insurance policy to Protector Insurance.
• If your property is damaged by a leakage of water or from another cause originating from a different property (such as an upstairs flat), you will still need to submit a claim in your own name to Protector Insurance for the damage within your flat. It may be that Protector Insurance can secure a recovery of the cost of damage from the owners of the other property.
• If your contents and personal belongings (such as carpets and furniture) are damaged, you should make a claim on your contents insurance policy, as the building insurance does not cover your contents.

If you don’t have contents insurance and you feel that your neighbour is responsible, you can only make a claim against them if you can prove they have been negligent. This means that if the leak was an accident or you cannot prove it was the result of negligence then you will not be able to make a claim.

Is the council responsible for damage from a leak to my flat caused by a council tenant or a tenanted flat?

If a council tenant causes damage to your flat, for example by an overflow from a sink or bath, the council would not be responsible for repairing the damage. You should make a claim on the buildings insurance and your contents insurance as necessary.

If you think the leak has resulted from a problem in the tenanted flat which is the responsibility of the council to fix, you should make a claim on your buildings and/or contents insurance.

However, if you think the council has been negligent, for example in not carrying out a repair within a reasonable time once it had been made aware of it, you can make a claim on the council’s own insurance. You should contact your leasehold officer who will send you a public liability claim form.

What if I cause damage to another leaseholder’s property?

If you damage the structure/fabric of the property, the other leaseholder should make a claim on the building insurance.

If you damage the contents, the other leaseholder can claim on their own contents insurance. If their contents insurers think that you have been negligent, they may seek to recover costs from you.

As long as your property is not sublet, in most instances any liability that may arise would be an occupier’s liability which may be covered by your own contents
insurance. You should notify your contents insurers of any claim made against you, and also if you are subletting.

What if I cause damage to a tenanted property?

If you damage the structure/fabric of property owned by the council and occupied by a tenant of the council, it is the council’s responsibility to repair the property. We will recharge the cost to you if you have acted in a negligent manner.

If you damage the tenant’s contents they can claim on their own contents insurance. If their contents insurers think that you have been negligent, they may seek to recover costs from you.

As long as your property is not sublet, in most instances any liability that may arise would be an occupier’s liability which may be covered by your contents insurance. You should notify your contents insurers of any claim made against you.

The policy issued by Protector Insurance includes, subject to certain conditions, cover for any proven liability you have as owner as opposed to occupier of the premises. See the next two sections for an outline of the difference in insurance terms between your liability as an owner and as an occupier.

What is “owner’s liability” and what does it cover?

Your buildings insurance policy includes cover of up to £5,000,000 for any legal liability you have as the owner of your home to compensate others following an accident for ‘bodily injury’ (including death or disease), or for loss or damage to property.

As an example, if you sublet your flat and there was a leak that caused damage to the flat below, in most cases any such losses would be covered by the downstairs neighbour’s own buildings and/or contents policies. Their insurers may look to make a recovery from you as the owner of the flat where the leak occurred if they consider you have been negligent, for example if you had failed to carry out a repair within a reasonable time.

If the neighbour does not have any cover in place, they may wish to claim against the owner of the property above, who will then pass the claim to Protector Insurance for consideration under this policy.

Where you are living in the flat yourself, a claim is likely to be made to your contents insurers based on your occupiers’ liability. Please see the next section for further details.

What is “occupier’s liability” and what does it cover?

Generally speaking, when looking at the duty of care a homeowner has to others, the law takes the view that a person’s responsibilities as occupier of a property will take priority over those as owner. The reason for this is someone living at a property can exercise a higher degree of control over the property in their capacity as occupier.

Both buildings policies and contents policies will usually include liability cover, with a buildings policy providing cover for owner’s liability, while a contents policy provides liability for the occupier of the home.

If you are living in the flat, liability claims will often be passed to your contents insurer for consideration under the occupier’s liability section of cover. For example if you or a member of your family have let a bath overflow on a number of occasions, and your downstairs neighbour is seeking reimbursement of their uninsured costs in respect of damage to their building and/or contents, your contents insurance is most likely to provide you with cover for any claims made against you.