Buildings Insurance for Blocks of Flats: A Complete Guide
Everything you need to know about buildings insurance for a block of flats. This guide explains who arranges and pays for block of flats insurance, what building insurance covers in flats, the difference between leasehold and freehold buildings insurance responsibilities, and how a professional managing agent ensures your block insurance policy provides comprehensive protection at a competitive price.
Why Buildings Insurance Is Essential for Blocks of Flats
Buildings insurance for a block of flats is not optional. It is a fundamental requirement that protects the building structure, communal areas, and every flat owner's investment against catastrophic loss. Without adequate block of flats insurance, the cost of repairing or rebuilding after a fire, flood, subsidence event, or major structural failure would fall directly on the freeholder and leaseholders, potentially running into hundreds of thousands of pounds.
In the vast majority of leasehold properties, the lease itself requires the freeholder to maintain buildings insurance for the entire block. This is not merely good practice; it is a legal obligation enshrined in the terms of the lease. Mortgage lenders also require confirmation that adequate buildings insurance is in place before lending against any flat in the building. If a block insurance policy lapses or provides insufficient cover, it can prevent sales, remortgages, and leave every resident exposed to significant financial risk.
Whether you are a freeholder, a leaseholder, or a director of a residents' management company, understanding how block insurance for flats works is essential. This guide covers the key areas you need to know. For a detailed overview of our insurance services, visit our block insurance page.
Who Arranges and Pays for Buildings Insurance?
Understanding who is responsible for arranging and funding buildings insurance on a block of flats is one of the most common questions we receive. The answer depends on the ownership structure and the terms of the lease, but in most cases the responsibilities fall into one of the following arrangements.
The Freeholder Arranges Insurance
In the most common arrangement, the freeholder has a covenant in the lease requiring them to insure the building. They arrange the block insurance policy and recover the full premium from leaseholders through the service charge. The freeholder must insure for the full reinstatement value and ensure the policy is adequate and up to date. For more on freeholder obligations, see our freeholder responsibilities guide.
The Managing Agent Arranges Insurance
In practice, most freeholders delegate the arrangement of block of flats insurance to their appointed managing agent. The agent sources quotes from specialist insurers, compares cover and premiums, and places the policy on behalf of the freeholder. A good managing agent will tender the insurance competitively each year to ensure the best value. Learn more about this role on our managing agent responsibilities page.
Leaseholders Fund the Premium via Service Charge
Regardless of who arranges the insurance, the cost is almost always passed to leaseholders through the service charge. The insurance premium is apportioned between all units in the building according to the schedule set out in the lease. This means every leaseholder contributes to the cost of protecting the whole building. For details on how service charges work, see our service charge management guide.
If you are unsure who arranges the insurance for your building or want to check that the policy provides adequate cover, your first step should be to contact your managing agent or freeholder. Under the Landlord and Tenant Act 1985, leaseholders have the right to request a summary of insurance costs and inspect the policy documentation.
What Does Buildings Insurance Cover?
A comprehensive block insurance policy should cover the full reinstatement cost of the building, including all structural elements and communal areas. What does building insurance cover in flats is a question every leaseholder should be able to answer. Below is a summary of what is typically included and excluded in a standard buildings insurance block of flats policy.
Typically Covered
- Building structure: walls, roofs, floors, ceilings, foundations
- Communal areas: hallways, stairwells, entrance lobbies, car parks
- Fixed installations: plumbing, wiring, heating systems, lifts
- Windows, doors, and external fixtures
- Fire, flood, storm, and escape of water damage
- Subsidence, heave, and landslip
- Impact damage from vehicles or falling objects
- Theft and vandalism to the building fabric
- Public liability for communal area accidents
- Professional fees for rebuilding (architects, surveyors)
Typically Not Covered
- ✕Leaseholders' personal contents and belongings
- ✕Cosmetic damage and general wear and tear
- ✕Improvements made by individual flat owners
- ✕Damage caused by lack of maintenance
- ✕Gradual deterioration or inherent defects
- ✕Damage from pests or vermin
- ✕Mechanical or electrical breakdown of appliances
- ✕The source of a water leak (e.g. defective pipe)
It is important that the block of flats insurance policy is reviewed annually to ensure the rebuild value is accurate and the cover reflects any changes to the building. If major works have been completed, such as a new roof or cladding replacement, the reinstatement value should be updated accordingly. At Block, we arrange a block of flats insurance comparison each year to ensure our clients receive the most competitive premiums and the most comprehensive cover available.
Leasehold vs Freehold Insurance Responsibilities
The distinction between buildings insurance for flats with leasehold and buildings insurance for flats with freehold is an important one. The ownership structure determines who bears the legal obligation to arrange and maintain the insurance policy, and who has the right to choose the insurer.
Leasehold Buildings Insurance
In a standard leasehold arrangement, the freeholder is responsible for insuring the building, and leaseholders pay their share through the service charge. The leaseholder does not choose the insurer but has the right to challenge the cost if the premium is not reasonably incurred.
- Freeholder arranges the block policy
- Leaseholders pay through the service charge
- Leaseholders can request policy details
- Right to challenge unreasonable premiums
Freehold Buildings Insurance
Where flat owners collectively hold the freehold, typically through a residents' management company or following collective enfranchisement, the responsibility for arranging freehold buildings insurance rests with the company directors.
- Directors arrange insurance on behalf of all owners
- Greater control over insurer selection
- Costs shared between all participating owners
- Managing agent can handle placement and claims
Whether your building is held under a leasehold or freehold structure, the key principle is the same: a single block insurance policy should cover the entire building to avoid gaps in cover and ensure consistency of protection. For more on freehold structures, see our freehold management guide. For an overview of leaseholder entitlements, visit our leaseholder rights page.
How Your Managing Agent Handles Block Insurance
A competent managing agent plays a central role in ensuring that buildings insurance for a block of flats is properly arranged, competitively priced, and claims are handled efficiently. Insurance is one of the most significant items in any building's service charge budget, and the quality of the agent's work in this area directly affects the cost to leaseholders and the level of protection the building receives.
At Block, our approach to block insurance is built on transparency, competitive tendering, and proactive claims management. Here is how we manage the insurance process for our clients.
- Annual competitive tendering through specialist block insurance brokers to secure the best premiums and cover
- Regular rebuild valuations to ensure the sum insured accurately reflects the full reinstatement cost
- No hidden commissions or mark-ups on insurance premiums, with full disclosure to leaseholders
- Dedicated claims handling to ensure leaseholders receive prompt support when incidents occur
- Policy documentation made available to leaseholders on request, including certificates and schedules
- A clear block of flats insurance comparison report provided annually so directors and freeholders can make informed decisions
If your current managing agent is not tendering your insurance competitively or you suspect hidden commissions are inflating your premiums, it may be time to consider a change. Learn more about what to expect from a professional agent on our managing agent responsibilities page.
Frequently Asked Questions About Buildings Insurance for Flats
Do I need building insurance in a block of flats?
Yes, buildings insurance is essential for any block of flats. In most cases, the lease requires the freeholder or their appointed managing agent to arrange a single block insurance policy that covers the entire building structure and communal areas. Individual leaseholders do not usually need to arrange their own buildings insurance because the block policy covers the fabric of the building. However, leaseholders should arrange separate contents insurance for their personal belongings and any internal fixtures that fall outside the scope of the block policy.
Who pays for building insurance on a block of flats?
The cost of buildings insurance on a block of flats is typically paid by the leaseholders through the service charge. The freeholder or managing agent arranges the policy and recovers the premium as a service charge item, apportioned between all units in the building according to the terms of each lease. In some cases, the freeholder may pay the premium directly and recharge it in full to the leaseholders. The lease is the governing document that determines how insurance costs are allocated, and leaseholders have the right to request a summary of costs and inspect the insurance policy under the Landlord and Tenant Act 1985.
What does buildings insurance cover in a block of flats?
Buildings insurance for a block of flats typically covers the structure of the building including walls, roofs, floors, ceilings, windows, doors, staircases, lifts, and all communal areas. It also covers fixed installations such as plumbing, wiring, heating systems, and fitted kitchens or bathrooms that form part of the building fabric. Standard policies provide cover against fire, flood, storm, subsidence, escape of water, theft, vandalism, and impact damage. The policy should also include public liability cover for accidents in communal areas. What is not usually covered includes leaseholders personal contents, cosmetic damage, general wear and tear, and any improvements made by individual flat owners that are not part of the original building.
How much is buildings insurance for a flat?
The cost of buildings insurance for a flat varies depending on the size of the building, the number of units, the rebuild value, the location, construction type, claims history, and the level of cover selected. The premium for the entire block is divided between all leaseholders through the service charge, so each flat owner pays a proportionate share rather than the full cost. Factors that increase premiums include a history of subsidence, flood risk, non-standard construction materials, and buildings with flat roofs or listed building status. A competent managing agent will tender the insurance annually to ensure the block receives competitive cover at the best available rate.
Does building insurance cover leaks in flats?
Buildings insurance generally covers damage caused by escape of water, which includes burst pipes, leaking tanks, and overflowing appliances. If a water leak in a block of flats causes damage to the building structure or to another flat, the block insurance policy should respond to cover the cost of repairs to the affected areas. However, the policy typically does not cover the cost of repairing the source of the leak itself, such as replacing the defective pipe or appliance, as this is considered a maintenance issue. The managing agent should be notified immediately when a leak is discovered so that a claim can be submitted promptly and the damage is mitigated.
Are leaseholders responsible for building insurance?
In most leasehold arrangements, leaseholders are not directly responsible for arranging buildings insurance. The lease usually places the obligation on the freeholder to insure the building and recover the cost through the service charge. However, leaseholders are indirectly responsible because they fund the insurance premium through their service charge contributions. Leaseholders have important rights in relation to the insurance, including the right to request a summary of the policy, to be notified of the insurer and policy number, and to challenge the cost if they believe the premium is not competitively sourced. If you are a leaseholder and unsure about your building insurance arrangements, speak to your managing agent or freeholder.
Expert Block Insurance Management You Can Trust
Whether you need help arranging buildings insurance for a block of flats, want a competitive block insurance comparison, or are looking for a managing agent that handles insurance transparently and professionally, Block is here to help. We manage block insurance policies for buildings of all sizes across England and Wales, ensuring comprehensive cover at the best available price.