Apartment block insurance
The renewal of property insurance for an apartment block has never just been a form filling exercise. For some block managing agents, landlord and leaseholders this has just leapt to a stratospheric level.
Depending on construction, some blocks are seeing their insurance premiums rise by 800% and some unable to secure any cover at all.
Chartered Surveyor Rupert Hambly Director of west country block management specialists, Peninsula Management, based in Barnstaple North Devon reported “Property insurance is a key cost and an important annual duty. Fortunately we haven’t experienced any dramatic rises in property insurance premiums within our portfolio throughout Devon, Cornwall and Somerset but we are ever watchful.” There are higher blocks in locations such as Exeter, Torquay, Plymouth, Taunton and Bristol so even in the west country these rates hikes are a threat. Rupert however highlighted two aspects which remain critical for everyone.
“At the annual renewal always look for value in insurance premiums. However, we don’t focused solely on the level of premium. The quality of the insurer, the policy terms and ‘small print’ are all part of the decision. However, where we have seen some major issues when taking on new blocks, for management by our agency for the first time, is the level of insurance cover. Some blocks have significantly under insured their buildings. This might go unnoticed, sometimes for years, just applying an inflationary uplift. If there was to a be a claim the consequences don’t bear thinking about. It is extremely concerning that many leaseholders are living in total ignorance of the higher risk to which they have been exposed.”
The shock rises are in high rise blocks, with external cladding. The largest recent rise in insurance premium for an apartment block that we are aware of is for flats in Peckham in south east London, where the premium has risen 782% to £300,000! Another example in Paddington Walk, west London saw last year’s premium of £130,000 increase to £690,000 this year. The construction is of flammable aluminium composite material and timber cladding. The leaseholders bear the costs and are exposed to the future!
There are approximately 700,000 residents living in blocks of flats higher than 18m, which are clad in flammable materials reports The Times. The government has allocated £1.6 billion to replace combustible cladding but this might only be a fraction of the actual costs. The longer it takes to undertake these works, the risks continue.
Blocks of flats and apartments lower than 18m are not eligible to benefit from government assistance and costs for the replacement of any cladding remains with the leaseholders.
The fundamental responsibility remains, ensure your block is appropriately insured.
Rupert Hambly MRICS MSc
Director | Chartered Surveyor