Block of Flats Insurance Guide: Cover & Costs
A comprehensive guide to block of flats insurance, covering what a block insurance policy includes, who pays for buildings insurance block of flats arrangements, your leasehold insurance rights, the cost of block insurance for flats, and how to challenge unreasonable premiums. Whether you hold a lease, own the freehold, or manage the building, this guide explains everything you need to know about buildings insurance for flats with leasehold and freehold interests.
What Is Block Insurance?
Block of flats insurance is a buildings insurance policy that covers an entire block of flats under a single policy rather than insuring each flat individually. The policy protects the physical structure of the building, including the roof, walls, foundations, communal hallways, stairwells, lifts, and shared services. A block insurance policy is the standard approach to insuring residential blocks in the UK, ensuring there are no gaps in cover between individual units and that the building is protected as a whole.
The requirement for a block insurance policy is almost always set out in the lease. The freeholder has an obligation to insure the building and to recover the cost from leaseholders through the service charge. This means that while individual leaseholders do not arrange the buildings insurance themselves, they do pay for it as part of their annual service charge contribution.
For a broader overview of how buildings insurance works and what it covers, see our buildings insurance guide. For details of the insurance service we provide to managed blocks, visit our block insurance service page.
Who Pays for Buildings Insurance in a Block of Flats?
The cost of buildings insurance block of flats arrangements is ultimately borne by the leaseholders. The lease will specify which party is responsible for arranging the insurance and how the premium is divided. In the vast majority of blocks, the freeholder or their appointed managing agent arranges the policy and recharges the premium to leaseholders through the service charge.
Freeholder-Arranged Insurance
Where the freeholder arranges the block insurance for flats, the full premium is included in the service charge demand sent to each leaseholder. The lease will set out the proportion each flat must pay, which is typically based on floor area, rateable value, or an equal share. The freeholder has a duty under the lease to arrange insurance on reasonable terms, and leaseholders have the right to see the policy and challenge the premium if they consider it excessive.
Resident Management Company Insurance
In blocks where the leaseholders have collectively purchased the freehold or formed a resident management company, the responsibility for arranging buildings insurance for flats with freehold ownership rests with the company directors. This gives leaseholders direct control over the choice of insurer, the level of cover, and the premium, but it also means they bear the responsibility for ensuring the building is adequately insured at all times.
Whether insurance is arranged by the freeholder or by the leaseholders themselves, the cost forms part of the service charge and is subject to the same requirements of reasonableness that apply to all service charge expenditure.
What Block Insurance Covers
A block insurance policy for a block of flats typically provides cover against a range of insured perils. Understanding what is and is not covered is essential for leaseholders, freeholders, and managing agents when evaluating the suitability of a policy and when making a claim.
Standard Perils Covered
Most block of flats insurance UK policies cover fire, lightning, explosion, storm, flood, escape of water, impact damage, subsidence, theft, vandalism, and malicious damage. These are the core perils that protect against the most common causes of damage to residential buildings. The sum insured should reflect the full rebuilding cost of the block, including demolition, site clearance, professional fees, and compliance with current building regulations.
Property Owners' Liability
A comprehensive block insurance policy will include property owners' liability cover, which protects the freeholder and managing agent against claims from third parties who are injured or whose property is damaged due to a defect in the building. This cover is particularly important for communal areas where visitors, contractors, and members of the public may be present.
Additional Cover Options
Depending on the building, additional cover may be needed for terrorism, engineering inspection of lifts and boilers, directors' and officers' liability for resident management companies, and loss of rent or alternative accommodation following an insured event. For a full breakdown of what buildings insurance should include, refer to our buildings insurance guide.
Leasehold Insurance Rights
Leaseholders have a number of important statutory rights in relation to the buildings insurance block of flats arrangements. These rights are designed to ensure transparency and to protect leaseholders from being overcharged for insurance that they are obliged to pay for through the service charge.
Right to Information
Under Schedule 1, paragraph 8 of the Landlord and Tenant Act 1985, leaseholders have the right to request a summary of the insurance policy covering their building. The freeholder must provide this summary within 21 days of the request. Leaseholders also have the right to inspect the full policy document and any related correspondence. These rights enable leaseholders to verify that the building is properly insured and that the premium being charged is consistent with the cover provided.
Right to Challenge the Premium
If a leaseholder believes the insurance premium included in their service charge is unreasonable, they have the right to apply to the First-tier Tribunal (Property Chamber) for a determination. The Tribunal can assess whether the premium was reasonably incurred and whether the leaseholder is being asked to pay more than is necessary for adequate cover. This is an important protection, particularly in cases where the freeholder may have an undisclosed relationship with the insurance broker or where the premium appears significantly higher than comparable block of flats insurance comparison quotes.
Right to Nominate an Insurer
Under Section 30A of and Schedule 4 to the Landlord and Tenant Act 1987, leaseholders have the right to nominate an alternative insurer. If a leaseholder obtains a competitive quote for equivalent cover, the freeholder must consider the nomination and provide reasons if they choose not to accept it. This right gives leaseholders a practical mechanism for keeping insurance costs under control.
Block Insurance Costs
The cost of block of flats insurance varies significantly depending on a number of factors. Understanding what drives the premium is important for leaseholders who want to assess whether the charges they are paying are reasonable, and for directors and managing agents who are responsible for obtaining competitive quotes.
Factors Affecting the Premium
Key factors that influence block of flats insurance UK premiums include the rebuilding cost of the block, the number of flats, the age and construction type of the building, the location and postcode, claims history, proximity to water, the level of excess, and whether the block has any special features such as flat roofs, timber framing, or listed building status. Blocks with a poor claims record or those in flood-risk areas will typically face higher premiums.
Comparing Quotes
A thorough block of flats insurance comparison is essential for ensuring leaseholders are not overpaying. Managing agents should obtain multiple quotes from specialist block insurance brokers and compare them on a like-for-like basis, considering not just the premium but also the breadth of cover, the excess levels, and any exclusions. At Block, we use our buying power across a large portfolio to negotiate competitive premiums for every block we manage.
Commission and Transparency
Managing agents and freeholders may receive a commission from the insurance broker for placing the policy. The Landlord and Tenant Act 1985 and the RICS Service Charge Residential Management Code require transparency about any commissions received. Leaseholders are entitled to ask about commissions and to factor this into their assessment of whether the premium is reasonable. A lack of transparency around insurance commissions is a common source of service charge disputes.
How to Challenge Insurance Premiums
If you believe the insurance premium charged through your service charge is unreasonable, there are several steps you can take. Challenging a premium is a legitimate exercise of your leaseholder rights and does not require you to withhold payment while the matter is investigated.
- Request a copy of the insurance policy and the broker's placement slip from your freeholder or managing agent
- Obtain your own comparative quotes from specialist block insurance brokers to benchmark the current premium
- Check whether the rebuilding cost valuation is up to date and accurate, as an inflated valuation will lead to an inflated premium
- Ask whether any commission is being received by the freeholder or managing agent and how much it is
- Write to the freeholder or managing agent setting out your concerns and requesting an explanation for the premium level
- If the matter cannot be resolved informally, apply to the First-tier Tribunal for a determination on the reasonableness of the insurance cost
- Consider exercising your right to nominate an alternative insurer under the Landlord and Tenant Act 1987
- Work with other leaseholders in the block to present a collective challenge, which carries more weight than an individual complaint
A managing agent acting in the best interests of leaseholders should welcome scrutiny of the insurance arrangements and should be able to demonstrate that the premium represents good value for the cover provided.
Choosing the Right Block Insurance Policy
Selecting the right block insurance policy requires careful consideration of the building's specific needs, the terms of the lease, and the expectations of leaseholders. A policy that is too cheap may leave the building underinsured, while an unnecessarily expensive policy burdens leaseholders with avoidable costs.
The starting point is an accurate rebuilding cost assessment carried out by a qualified surveyor. This ensures the sum insured is neither too high nor too low. The policy should cover all standard perils, include property owners' liability, and comply with any specific requirements set out in the lease. For blocks with lifts, the policy should include engineering inspection cover, and blocks with resident management companies should consider directors' and officers' liability cover.
When conducting a block of flats insurance comparison, it is important to compare not only the headline premium but also the excess levels, the scope of cover, any exclusions, and the insurer's claims handling reputation. Our buildings insurance guide provides further detail on evaluating policy terms and ensuring your building has the right level of cover.
The Role of the Managing Agent
The managing agent plays a central role in the block insurance for flats process. From arranging the policy to handling claims and ensuring compliance with lease obligations, a competent managing agent adds significant value to the insurance arrangements for any block.
- Obtaining competitive quotes from specialist block insurance brokers and presenting options to directors or the freeholder
- Ensuring the rebuilding cost valuation is current and the sum insured is adequate
- Arranging cover that complies with the lease terms and protects the interests of all leaseholders
- Managing the claims process efficiently, from initial notification through to settlement
- Providing leaseholders with insurance information and responding to requests under the Landlord and Tenant Act 1985
- Maintaining transparency about commissions and any relationships with insurance brokers
- Reviewing the policy annually to ensure it continues to meet the building’s needs and represents good value
At Block, insurance management is a core part of our block insurance service. We work with leading specialist brokers to secure comprehensive cover at competitive premiums for every building we manage. For more information about freeholder responsibilities in relation to insurance, see our dedicated guide.
Frequently Asked Questions About Block of Flats Insurance
Do I need building insurance in a block of flats?
Yes. Buildings insurance is a legal and practical necessity for any block of flats. The lease will almost always require the freeholder or a residents’ management company to arrange buildings insurance covering the entire structure. Individual leaseholders do not typically arrange their own buildings insurance for the structure because the building must be insured as a whole under a single block insurance policy. This ensures that there are no gaps in cover and that every part of the building, including communal areas, the roof, foundations, and shared services, is protected. If you own a share of the freehold or are a member of a right-to-manage company, the obligation to arrange insurance may fall on you collectively. Even where the freeholder arranges insurance, the cost is passed to leaseholders through the service charge.
Who pays for building insurance on a block of flats?
In most cases, the freeholder or their managing agent arranges the buildings insurance for the block, and the cost is recovered from leaseholders through the service charge. The lease will specify how the insurance premium is apportioned between flats, typically by a fixed percentage or proportion. Leaseholders therefore pay for the buildings insurance indirectly as part of their service charge. In blocks where leaseholders have collectively purchased the freehold or exercised the right to manage, the responsibility for arranging and paying for insurance rests with the residents’ management company or the right-to-manage company. Regardless of who arranges the policy, the cost ultimately falls on the leaseholders who benefit from the cover.
Does building insurance cover leaks in flats?
Buildings insurance for a block of flats typically covers damage caused by sudden and unforeseen events such as burst pipes, storm damage, or escape of water. If a leak causes damage to the structure or communal areas, the block insurance policy should respond to the claim. However, buildings insurance does not usually cover gradual deterioration, wear and tear, or damage resulting from a lack of maintenance. The scope of cover depends on the specific terms of the policy, so it is important to check what perils are included. Individual leaseholders may also need their own contents insurance to cover damage to personal belongings and any internal fixtures and fittings that are their responsibility under the lease.
Can you get buildings insurance for a single flat?
If you are a leaseholder in a block of flats, you do not normally need to arrange buildings insurance for the structure of your individual flat because the entire building should be insured under a single block insurance policy arranged by the freeholder or management company. However, if you own a freehold flat or a flat that is not part of a managed block, you may need to arrange your own buildings insurance. Some mortgage lenders require individual buildings insurance where there is no block policy in place. In all cases, leaseholders should have their own contents insurance, and may also want to consider liability cover and cover for any improvements they have made to the interior of their flat.
What does buildings insurance cover in a block of flats?
A buildings insurance policy for a block of flats typically covers the cost of repairing or rebuilding the structure of the building following damage caused by insured perils. These perils usually include fire, flood, storm, subsidence, escape of water, impact damage, and vandalism. The policy covers the main structure including walls, roof, floors, foundations, windows, and doors, as well as communal areas such as hallways, stairwells, and shared facilities. It will also normally cover landlord’s fixtures and fittings, lifts, and other permanently installed equipment. Some policies include property owners’ liability cover, which protects against claims from third parties who are injured or whose property is damaged as a result of a fault in the building. Engineering inspection cover and terrorism cover may be available as additional options.
Are leaseholders responsible for building insurance?
Leaseholders are not usually directly responsible for arranging buildings insurance in a block of flats. The lease typically places the obligation on the freeholder to insure the building and to recover the cost from leaseholders through the service charge. However, leaseholders have important rights in relation to the insurance. Under Schedule 1, paragraph 8 of the Landlord and Tenant Act 1985, leaseholders have the right to request a summary of the insurance policy and to inspect the policy document. Leaseholders can also challenge the cost of insurance through the First-tier Tribunal if they believe the premium is unreasonable. Where leaseholders have collectively enfranchised or exercised the right to manage, they become directly responsible for arranging the buildings insurance for the block.
Need Help With Block of Flats Insurance?
Whether you are a leaseholder who wants to understand your buildings insurance block of flats rights, a director looking for a competitive block insurance policy, or a freeholder seeking a reliable managing agent to handle your insurance arrangements, Block Management Company is here to help. Our experienced team arranges and manages block of flats insurance for hundreds of buildings across the UK.