Who's Insured for What? Buildings Insurance in Blocks, Explained
Buildings insurance can feel like one of those subjects everyone assumes somebody else understands.
The freeholder may arrange the policy. The managing agent may handle the claim. Leaseholders may pay through the service charge. Meanwhile, residents still need to know whether their flooring, kitchen, belongings or liability are actually covered.
For anyone involved in leasehold property management, the answer depends on three things: the insurance policy wording, the policy schedule and the lease.
This guide explains the usual arrangement for blocks of flats in Essex and across England. It is general information, not regulated financial or legal advice. Always check the documents for your own block and speak to your managing agent, freeholder or insurance broker if you are unsure.
The short answer: one building, several types of cover
In many leasehold blocks, the freeholder or a residents’ management company arranges one buildings insurance policy for the whole property.
That policy will usually relate to the building itself: its structure, roof, communal areas and other shared parts. The premium is then recovered from leaseholders through the service charge, where the lease allows this.
A leaseholder will normally need separate cover for:
Personal belongings and household contents
Personal liability, often included within a suitable contents policy
Internal items that the lease or block policy places under the leaseholder’s responsibility
Any specific risks associated with subletting or leaving the flat unoccupied
So, there are often two layers of protection:
Block buildings insurance, arranged for the property as a whole
Individual contents and personal cover, arranged by the resident
But “usually” is important. Different leases and policies can allocate responsibility differently.
What does block buildings insurance usually cover?
A block buildings policy is intended to protect the insured building against specific insured events, sometimes called “perils”.
Subject to the policy wording, it may cover:
The main structure and fabric of the building
External walls, foundations and roof
Communal hallways, staircases, entrances and shared facilities
Communal doors, windows and other specified fixtures
Shared pipes, cables and services, depending on their location and the wording
Boundary walls, gates, paths, garages or other associated areas where listed
Rebuilding-related costs, such as debris removal or professional fees, where included
Property owners’ liability connected with the insured building
Alternative accommodation or loss of rent in certain insured circumstances
Common insured events can include fire, escape of water, storm damage, flood, subsidence, malicious damage or impact. However, no two policies should be assumed to be identical.
For example, a policy may cover sudden damage caused by a burst pipe but not the cost of replacing a pipe that has gradually deteriorated. It may cover resulting water damage but apply a different excess to the escape-of-water claim.
The policy schedule should show the important details, including the sum insured, excesses, insured events and notable exclusions.
What is usually not covered by the block policy?
Buildings insurance is not a general maintenance fund.
It will not normally pay for every repair, defect or improvement required at a block. Typical exclusions or limitations may relate to:
Wear and tear
Gradual deterioration
Poor maintenance
Defective design or workmanship
Certain types of damp or condensation
Damage caused by unauthorised works
Personal belongings and moveable items
Items specifically excluded from the building definition
Unoccupied or sublet properties where policy conditions have not been followed
The exact position is always policy-specific.
A leaking roof caused by a sudden storm may be treated differently from a roof that has been allowing water through for months because maintenance was deferred. Likewise, a damaged fitted kitchen may be treated as part of the building under one arrangement but as the leaseholder’s responsibility under another.
That is why a quick glance at the word “buildings” is not enough. The definition of “building” matters.
What does a leaseholder normally arrange themselves?
A leaseholder’s own insurance usually covers their personal possessions rather than the structure of the block.
This may include:
Furniture and soft furnishings
Electrical equipment
Clothing and personal items
Bikes or other belongings, subject to policy limits
Accidental damage to contents, if selected
Personal liability, where included in the policy
Alternative accommodation for the resident’s belongings or living arrangements, depending on the policy
Personal liability can be particularly important. For example, a resident may accidentally cause damage to another property or injure someone in circumstances covered by their policy. Whether a claim is accepted depends on the facts and policy terms.
Leaseholders should also check whether they need separate cover for internal fixtures and fittings. In some blocks, the buildings policy includes items such as fitted kitchens, bathroom fittings, internal doors, plasterwork or floor coverings. In other arrangements, some or all of these may fall to the leaseholder.
Do not assume that every item fixed inside a flat is automatically covered by the block policy.
Why can’t a leaseholder usually insure the whole building?
A leaseholder normally owns a long leasehold interest in a particular flat, not the building as a whole.
The freeholder, landlord or management company usually has the contractual responsibility to insure the structure for everyone’s benefit. A single block policy also avoids the confusion that could arise if different leaseholders insured the same roof, walls or communal staircase with different insurers.
This is why an individual leaseholder will often be unable to arrange their own replacement buildings policy for the whole block. Their separate policy is generally intended to sit alongside the block policy, not replace it.
There can be exceptions. Some leases divide responsibility in unusual ways, with a leaseholder responsible for insuring their own demised premises while the freeholder insures the shared structure. The lease should always be checked before drawing conclusions.
The FCA’s guidance on leaseholder buildings insurance is a useful starting point for understanding the usual relationship between leaseholders, property owners and insurance arrangements.
Who arranges the policy and who pays?
The freeholder commonly arranges the block policy. In some developments, the residents’ management company or an RTM company takes responsibility instead.
A managing agent may arrange the policy on behalf of the freeholder or management company, but the agent is not necessarily the insured party. Their role may include obtaining quotations, managing renewals, explaining the cover, coordinating claims and recovering costs through the service charge.
The premium is normally paid to the insurer by the policyholder. The appropriate share is then recovered from leaseholders through the service charge, provided the lease permits this and the charge is properly demanded.
The method of apportionment should also come from the lease. It might be based on a stated percentage, an equal share or another calculation.
Leaseholders should be able to ask for information such as:
The insurer’s name
The policy period
The policy schedule or summary
The total premium
Applicable excesses
Any commission or other remuneration disclosed under the arrangement
How the leaseholder’s share has been calculated
A transparent process gives investors confidence and helps residents understand what their service charge is funding.
Who pays the excess?
The excess is the amount that is not paid by the insurer when a claim is accepted.
There may be different excesses for different events. Escape of water, subsidence and other higher-risk claims can have separate amounts. The correct figure should be checked in the policy schedule rather than assumed.
Who ultimately bears the excess is more complicated.
It may be charged to the service charge account and shared between leaseholders. It may be allocated to an individual flat where the lease or the circumstances support that approach. It may also depend on whether the damage arose from a part of the building for which a particular leaseholder was responsible.
For instance, if a communal pipe fails, the excess may be treated differently from a leak caused by a washing machine connection inside one flat. The managing agent or freeholder should explain the basis for any recharge, but the lease remains central.
There is no universal rule that every excess is paid by the resident in the flat where the damage appeared.
Common situations that create insurance problems
A flat is empty for a long period
Policies can include conditions for unoccupied properties. These may involve inspection requirements, notification to the insurer, heating precautions or restrictions on certain risks.
If a flat will be empty for an extended period, the leaseholder should notify the managing agent and check the policy requirements before leaving.
A flat is sublet
Subletting may affect the block policy, the contents policy and the way a claim is handled. The lease may also require consent or impose conditions on letting.
A leaseholder should tell the appropriate parties about a sublet and arrange suitable landlord or tenant-related cover where necessary. Standard owner-occupier contents insurance may not be appropriate for a property that is rented out.
Unauthorised alterations are made
Removing walls, changing plumbing, installing hard flooring or altering windows can affect the risk presented to the insurer.
Unauthorised works may also breach the lease and complicate a claim. Permission should be obtained before work begins, with building regulations and contractor insurance considered where relevant.
A leak starts in one flat and damages another
The location where damage appears does not always identify who is legally or financially responsible.
A leak may originate from a private appliance, a pipe serving one flat, a communal service or a defect in the building. The buildings policy may respond to resulting damage, but the cause, maintenance responsibility, excess and any recovery action must be assessed.
Residents should avoid promising that they will personally pay for another flat’s repairs before the facts and policy position are clear.
How should a resident report a claim?
The first step is to make the situation safe and limit further damage where reasonably possible.
For example:
Turn off the water supply if safe to do so
Contact emergency services where appropriate
Report urgent risks to the managing agent or emergency contractor
Take photographs before cleaning or disposing of damaged items
Keep damaged parts or receipts where it is safe and practical
Record the date, time and people notified
Claims usually go through the managing agent or the freeholder’s nominated claims process. Some policies require residents to contact the insurer directly, while others require notification to the agent first.
Follow the instructions for your own block. Reporting a repair is not necessarily the same as making an insurance claim, and the managing agent can explain the next step.
What records should residents keep?
Good records can make a claim clearer and faster.
Keep:
Dated photographs and videos
Receipts or proof of purchase
Contractor reports
Emails and message threads
A timeline of events
Emergency call-out details
Temporary accommodation or mitigation receipts
Copies of relevant permissions for alterations or subletting
A simple folder, either digital or physical, can provide valuable peace of mind.
Questions to ask before assuming you are covered
Residents, freeholders and RMC directors should ask:
Who is responsible for arranging the buildings policy?
What exactly is included in the definition of “building”?
Are internal fixtures and fittings included?
What are the excesses for escape of water, storm damage and subsidence?
Who pays an excess in different claim situations?
Does the policy have conditions for empty or sublet flats?
What is the claims reporting route?
Is alternative accommodation included, and for whom?
How is the premium recovered through the service charge?
Does the lease allocate any insurance responsibility differently?
For a freeholder or RMC director, regular review is part of responsible asset management. For a resident, asking these questions early can prevent an unpleasant surprise after damage occurs.
Clear insurance arrangements support better block management
Buildings insurance works best when responsibilities are visible and communication is consistent.
A professional block management company can help coordinate the policy, maintain accurate records, manage claims and explain how insurance costs fit within the wider service charge budget. That creates a more reassuring experience for residents while protecting the long-term interests of freeholders, RMC directors and property investors.
If you are reviewing your current arrangements, our guide to questions to ask before hiring a block management company in Essex may be useful. You can also learn more about the difference between RMC and RTM arrangements.
The goal is not simply to have a policy in place. It is to ensure that everyone understands what it does, what it does not do and what happens when something goes wrong.
That clarity is a significant part of modern property management in Essex: fewer assumptions, faster decisions and greater peace of mind for the whole community.
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