Buildings Insurance Leasehold Dispute UK - How to Challenge Unfair Insurance Costs

A buildings insurance dispute can arise when a leaseholder believes the insurance premium is excessive, the policy provides inadequate cover, or the freeholder or managing agent has failed to provide proper information about the building insurance.

For most leasehold flats, the freeholder or landlord arranges buildings insurance and recovers the cost through the service charge. Leaseholders have rights to request information about the policy and can challenge unreasonable insurance costs.

What Does Buildings Insurance Cover in a Leasehold Property?

Buildings insurance generally protects the physical structure of the building rather than the leaseholder's personal belongings.

Depending on the policy, this can include:

• Roof and external structure

• Walls, floors and ceilings

• Communal areas

• Structural fixtures

• Damage caused by events such as fire, flooding or storms

• Certain water damage or subsidence risks

Contents such as furniture, personal possessions and many leaseholder improvements may require separate contents or other insurance.

The exact cover depends on the policy and the wording of the lease.

Who Is Responsible for Buildings Insurance?

In many leasehold blocks, the freeholder is responsible for arranging the building insurance, although the lease determines the precise obligations.

The insurance premium may then be recovered from leaseholders through the service charge or another charge permitted by the lease.

This means a leaseholder will not necessarily be able to arrange an individual buildings policy for their flat instead. In a block of flats, the building will commonly be covered under a single block policy.

When Can a Leaseholder Dispute Buildings Insurance?

A leaseholder may have grounds to challenge the insurance charge where they believe the amount being recovered is unreasonable or does not comply with the lease.

Common complaints include:

• The premium appears unusually high

• The policy provides inadequate or unsuitable cover

• Insurance costs have increased dramatically without a clear explanation

• The freeholder has failed to provide insurance information

• The lease does not permit the charge being demanded

• The leaseholder suspects excessive commissions or undisclosed remuneration

• The managing agent has provided insufficient information about the policy

The fact that another insurer offers a cheaper policy does not automatically mean the freeholder's insurance arrangement is unlawful. The lease and circumstances surrounding the insurance need to be examined carefully.

Can You See the Buildings Insurance Policy?

Yes, leaseholders have rights to obtain information about buildings insurance.

You can request information such as the insurance policy or a summary of the cover, allowing you to understand what the building is actually insured against and how the premium relates to the property.

This is particularly important when a large insurance charge appears on your service charge account.

If the freeholder or managing agent refuses to provide relevant information, keep your request and any response in writing.

Can You Challenge an Expensive Insurance Premium?

Potentially.

The cost of buildings insurance can form part of the charges recoverable from leaseholders, but leaseholders can challenge unreasonable insurance charges through the First-tier Tribunal in England. GOV.UK specifically identifies the cost of building insurance as a type of leasehold dispute that can be taken to a tribunal.

Before taking this step, it is usually sensible to:

1. Check the lease.

2. Request the insurance information.

3. Ask the freeholder or managing agent to explain the charge.

4. Compare the cover and circumstances rather than simply comparing headline premiums.

5. Keep copies of correspondence and service charge statements.

6. Obtain specialist leasehold advice if the dispute remains unresolved.

What If the Building Insurance Is Extremely Expensive?

High premiums can occur for legitimate reasons.

For example, insurance costs may be affected by:

• The age and construction of the building

• Previous claims

• Fire safety risks

• Cladding or other building safety concerns

• Subsidence risk

• Flood risk

• The number of flats

• The property's location

• The value of rebuilding the entire building

• The insurer's assessment of risk

Therefore, a substantial increase does not automatically prove that the freeholder has acted improperly.

However, leaseholders are entitled to question significant charges and understand what they are paying for.

What If You Have a Problem With an Insurance Claim?

A separate dispute can arise where the building has suffered damage but the insurer, freeholder or managing agent does not deal with the claim appropriately.

For example, a leaseholder might experience:

• Water damage from the roof

• Flooding

• Fire damage

• Structural damage

• Subsidence

• Damage to communal areas

The first step is normally to establish whether the damage falls within the policy and who is responsible for notifying the insurer and arranging repairs.

Do not assume that every repair inside a flat is automatically covered by buildings insurance. The cause of the damage, the lease and the policy wording can all affect responsibility.

What If the Freeholder Refuses to Deal With the Problem?

Start by making a formal written complaint.

Set out:

• The problem

• The relevant property or insurance details

• What information you have requested

• Why you believe the charge or handling of the claim is problematic

• What outcome you are seeking

Keep copies of all correspondence.

If the issue concerns an unreasonable insurance charge, a leasehold tribunal may be an option in England. Other disputes may require a different route depending on whether the issue concerns the lease, insurance contract, negligence or property management.

Buildings Insurance Disputes and Service Charges

Buildings insurance is often included within the wider service charge structure.

This means an insurance dispute can sometimes become part of a broader disagreement about service charges, management or major building expenditure.

Leaseholders should therefore look at the entire service charge statement rather than considering the insurance premium in isolation.

A large insurance charge alongside significant maintenance or major works can materially affect the affordability and value of a leasehold property.

What Should Buyers Check Before Buying a Leasehold Flat?

If you are buying a leasehold flat, investigate buildings insurance before exchanging contracts.

Ask for information about:

• Current insurance premium

• Policy cover

• Insurance excesses

• Previous claims

• Major exclusions

• Building safety issues

• Planned works

• Service charge history

• Any ongoing disputes

This can reveal potential costs that are not obvious from the property's asking price.

A flat with a seemingly attractive purchase price may become considerably more expensive if the building has high insurance premiums, major works or unresolved structural issues.

How Fraser Bond Can Help

Buildings insurance disputes can become complicated because the lease, service charge, insurance policy and management arrangements can all interact.

Fraser Bond can assist leaseholders, landlords, investors and property owners in understanding the practical property implications of insurance costs, service charges, building management and leasehold disputes.

Whether you are challenging an unexpected insurance charge, preparing to sell a leasehold flat or assessing a property investment, reviewing the underlying leasehold obligations early can help prevent expensive problems later.