Do I need buildings insurance for my flat if I have leasehold?

In most cases, no. The lease will typically require the freeholder to arrange buildings insurance for the whole building, and leaseholders cannot opt out. Individual leaseholders are responsible for insuring their own contents and any improvements they have made to their flat. If a leaseholder believes the freeholder’s buildings insurance is inadequate, they can challenge this through the First-tier Tribunal (Property Chamber).

Do I need building insurance if I live in a block of flats?

It depends on how you hold your flat. A leaseholder does not normally take out buildings insurance, because the block policy arranged by the freeholder, RMC or RTM company covers the structure and the leaseholder pays a share through the service charge; a leaseholder needs contents insurance and cover for any improvements the lease leaves to them. A tenant needs only contents cover. If you own a share of the freehold, you are one of the people responsible for making sure the block policy is in place.

What is a reinstatement cost assessment and why does it matter?

A reinstatement cost assessment (RCA) is a professional valuation of the cost to rebuild a property from scratch, including demolition, site clearance, and professional fees. It is used to set the buildings sum insured. Underinsurance — where the sum insured is less than the actual rebuilding cost — can result in a proportional reduction in any claim settlement. An RCA should be carried out by a qualified surveyor at least every three to five years.

Does block of flats insurance cover communal areas?

Yes. Block of flats insurance covers the structure of the building and communal areas, including communal hallways, stairwells, lifts, communal gardens, and shared facilities. The policy should also include property owners’ liability cover, which protects against claims from leaseholders, residents, or visitors who suffer injury or property damage in communal areas.

What is the difference between market value and reinstatement cost?

Market value is what the building would sell for. Reinstatement cost is what it would cost to rebuild it from scratch after a total loss — demolition, site clearance, professional fees, and construction to current building regulations. Block of flats insurance should always be arranged on the reinstatement cost. The two figures can differ substantially in either direction, and insuring on the wrong one is the most common cause of underinsurance.

What is the duty of fair presentation and who does it apply to?

Under the Insurance Act 2015, anyone arranging a commercial insurance contract — including block of flats insurance — must disclose every material circumstance they know or ought reasonably to know, in a clear and accessible way. For a block, that duty sits with the freeholder, RMC, RTM company or managing agent arranging the cover, and extends to what the wider organisation knows. Remedies for a breach are proportionate: a deliberate or reckless breach allows the insurer to avoid the policy, while an innocent one is judged on what the insurer would have done had it known.

How often should block of flats insurance be reviewed?

Review the policy at each annual renewal, and again whenever something material changes — major works, a change in occupancy, flats standing empty, new fire safety measures, or a claim. A professional reinstatement cost assessment should be refreshed roughly every three to five years, and sooner after significant building work or sharp construction cost inflation.

Is loss of rent covered under block of flats insurance?

Most block of flats insurance policies include loss of rent cover, which pays out if a flat becomes uninhabitable following an insured event such as a fire or flood. The indemnity period should be sufficient to cover the time needed to reinstate the property and re-let the affected flat. Freeholders should ensure the sum insured for loss of rent reflects the actual rental income from the property.

Who pays for buildings insurance on a block of flats?

The freeholder, residents management company or right-to-manage company takes out the policy, and the lease allows the premium to be recovered from leaseholders through the service charge, usually in the proportions the lease specifies. Leaseholders are entitled to see a summary of the cover and to inspect the policy under the Landlord and Tenant Act 1985. Since 2023 the FCA has required brokers and insurers to act in leaseholders interests when arranging the cover.

What buildings insurance do you need for a house converted into two flats?

A house split into two or more flats needs one buildings policy covering the whole structure, arranged by whoever owns the freehold. Separate home insurance policies per flat do not work because the roof, walls, foundations and shared services belong to the building rather than to either flat. If the flat owners share the freehold they normally insure through a jointly owned company; if a landlord owns the freehold and lets the flats, the policy sits with the landlord.

Is block of flats insurance a legal requirement?

No statute requires it, but almost every long lease obliges the freeholder or management company to keep the building insured, so not doing so is a breach of the lease that leaseholders can enforce. Mortgage lenders on individual flats also require buildings cover to be in place for the whole block before they lend, and often require terrorism cover separately.

How much is block of flats insurance?

There is no standard figure. Each block is rated on its own details: the rebuilding cost and number of flats, construction type and age, location and flood or subsidence exposure, cladding and fire safety arrangements, claims history, unoccupied flats and security. A specialist broker needs the reinstatement valuation, claims record and building details before approaching insurers.

How do I compare block of flats insurance quotes?

Compare like with like before comparing premiums. Check that every quotation uses the same reinstatement sum insured and covers the perils the leases require, then compare the liability limit, the excesses (the escape of water excess is often separate and higher), loss of rent, terrorism and engineering cover, unoccupancy conditions and directors and officers liability. A lower premium often reflects a lower sum insured, a higher excess or a narrower wording. Ask what commission is included: FCA rules since 2023 require it to be disclosed so it can be passed on to leaseholders.

Block of Flats Insurance: Buildings Cover for Freeholders & Managing Agents

Q: Who is responsible for insuring a block of flats?

The freeholder is responsible for arranging buildings insurance on a block of flats. Where a residents’ management company (RMC) or right-to-manage (RTM) company has been established, that company typically takes on the responsibility. Managing agents often arrange insurance on behalf of the freeholder or RMC. The cost is usually recovered from leaseholders through the service charge.

Block of flats insurance is one buildings policy that insures a whole residential block: the structure, the communal areas and shared services, property owners liability and usually loss of rent. It is arranged by the freeholder, residents management company, right-to-manage company or managing agent, and the premium is normally recovered from leaseholders through the service charge.

Frequently Asked Questions

Who is responsible for insuring a block of flats?

Responsibility depends on the ownership structure. Freeholders, Resident Management Companies (RMCs), and Right to Manage (RTM) companies are typically responsible for arranging buildings insurance for the whole block. Individual leaseholders are usually responsible for their own contents.

What does block of flats insurance cover?

Block of flats insurance typically covers the buildings structure, communal areas, landlord liability, and loss of rent. Some policies include engineering inspection, legal expenses, and directors and officers liability for RMCs. Cover is subject to underwriting, insurer terms and acceptance.

What is a block of flats insurance policy?

A block of flats insurance policy, often called a block policy or block buildings insurance, is one buildings policy covering a whole residential block: the structure, communal parts and shared services to the full reinstatement cost, usually with property owners liability and loss of rent. The freeholder, RMC or RTM company holds it and recovers the premium through the service charge.

Can I insure a mixed-use block with commercial units?

Yes. Mixed-use blocks with ground-floor commercial units require specialist underwriting. Insurers will assess the nature of the commercial use, the proportion of commercial to residential space, and the overall risk profile.

Do I need a reinstatement valuation for my block?

Yes. Insurers require the sum insured to reflect the full reinstatement cost, not the market value. An under-insured block risks a proportional reduction in any claim settlement. We recommend a professional reinstatement valuation every three to five years.

How do I arrange block of flats insurance through Focus Insurance?

Call us on 01733 263311 or request a call-back. We specialise in residential blocks and work with insurers who understand the complexities of leasehold and RMC structures.

Cover is subject to underwriting, insurer terms and acceptance