Gap and loophole between content and buildings insurance?

Hi Mike,

I will ask our insurance partner, Jason, to comment on this for us if he can 🙂

Great question. I own two leasehold flats and wonder whether I should take out some additional landlords cover. However I would need a policy that excluded tenant possessions and anything covered by the freeholder. Does anyone know if such cover exists?

Hi Mike

Thanks for the query. I'll try to keep my view as straightforward as possible.

* The buildings insurance should include all aspects of the building and items fixed to it. So built in cabinets, hard floors, walls etc should all be covered. If they are not covered, it is likely because the buildings insurance is pared down to the bone on price and various benefits have been excluded to hit a price point.

* The leak you mention would normally be dealt with as an escape of water claim. I don't know the details on your case so can't really comment, a leak is normally a leak and would be dealt with under escape of water. However, if it is viewed as a maintenance issue by the loss adjustor they may refuse any claim.

* As a leaseholder you can buy contents insurance that should include cover for freestanding items and carpets. If it doesn't then it may be too cheap with benefits removed again to hit a price point.

You ask how to cover yourselves; I'd suggest you ensure good quality buildings insurance through the management company and your own good quality contents insurance.

You tend to get what you pay for and if your insurance is not performing then you should look at understanding the cover actually on offer via reading the documents carefully, reviewing it and possibly looking for alternatives.

I do hope this helps and if you'd like to talk through, do call the office on 01832-735388.

There most certainly is a gap, and it becomes even more obvious when you have a tenanted flat. My husband and I own the freehold and leaseholds of our flats which are rented. We have a comprehensive (ie not cheap) buildings insurance and tenants are obviously responsible for their contents insurance. We had a leak (caused by neighbouring building) a few years back which destroyed a carpet in one of the bedrooms. Buildings insurance refused to cover its replacement because it’s not classed as part of the fabric of the building (apparently it would be if it was glued down, but who does that with carpets?). Tenants can’t really be expected to claim on their own contents insurance, why would they bother and face increased premium. I suspect it wouldn’t be covered anyway as the carpet doesn’t belong to them. So we were left to pay for the carpet issue ourselves. When we approached our insurance company and subsequently an insurance broker to try and find a solution, there isn’t one. There are some half hearted “landlord contents” bolt ons (we actually have that), but they still won’t cover things like a fitted carpet. If anyone has found a solution, I’d be very happy to hear it!

The insurance gap between block insurance and full landlord cover also concerns me. As well as the issues around damage to non building cover are landlords also exposed to liability claims by tenants (trip over a loose carpet type issue) or what if they cause damage to the communal areas or another flat either wilfully or by accident - can the freeholder or other flat owners claim for loss of the landlord? Whilst the likelihood or a 'lifechanging' claim may be small the consequences if not insured are very high to a landlord - is there no bolt on cover to protect landlords of leasehold properties with block buildings insurance?

I agree with all of these comments and in additionwould like cover for alternative accommodation for tenants should my flat become uninhabitable due to fire, escape of water etc whether caused by tenants or another flat in the block.

I am the only leaseholder in a multi storey block and my considerable service charge includes building insurance. I would doubt if any of the tenants in the block hold contents insurance and I have not taken this out as I let out my property unfurnished.
Last August storm damage caused significant damage to a number of flats and communal areas on the upper floors.
My flat has a large hallway and the wallpaper was ruined including that on the ceiling.
The Freeholder , ( the local housing association) refused to accept a claim against their building insurance as they classed wallpaper as a content and a claim should be made against my tenants non exsistant contents insurance. It beggars belief that wallpaper could be classed as something that can be taken from the property.
I contacted the housing association insurers directly and they are now processing my claim less a £250 excess.
Damage to other flats and communal areas must have run into several thousands of pounds but the Housing Association seem to have corrected damage to their social housing properties without making a claim against their insurance leaving me to pay the total excess !
Attempts to ask for the housing association to redecorate at their own expense also fell on deaf ears .

I have an apartment that was flooded by a leak from the communal pipework. It has a floating timber floor which was ruined. Neither the freeholders building insurance, nor my contents insurers would accept responsibility. Is a loose laid floor different to a loose laid carpet? I ended up taking the management company to a small claims court and they settled out of court.

I don't think this is a new issue. I received advise many years ago to make sure that I took out contents cover even if I wasn't leaving any contents of signficance in a property. It's better if insurance is a single building and contenants policy as they find it harder to argue. If your'e a leaseholder, however, then you can't do that so have to go solo on the contents. Polciies are quite cheap, though, so worth having.

I have heard of buildings insurers rejecting all sorts of claims for items we' d assume to be part of the property, beyond the obvious carpets and curtains.

Tenants should hold cover for their own contents and accidental damage to landlords' contents, but this would not necessarily cover the landlord's contents if the tenant wasn't responsible (e.g. flooding).

The message has to be to make sure you have contents insurance.

Probably worth adding is that buildings insurance will only cover what you've signed up to in your lease. I was shocked to discover a few years ago that the (massive) windows and window frames of my BTL apartment were specifically my responsibility in the lease and were therefore not covered by buildings insurance. I have contents insurance as it is furnished but having talked to many insurers I couldn't find one that would include the windows.

Currently I have a leaking flat roof above my apartment - once again this is excluded in the lease with the developer stating that it was untouched during the refurb. It was also specifically excluded in the 10 year warranty.

A landlord lesson learned here for me as I was naive enough when I bought the flat to believe the structure of the building wasn't my responsibility.