Why Building Insurance is Essential for a Block of Leasehold Flats
Building insurance is a fundamental requirement for the protection and proper management of a block of leasehold flats. Unlike insurance arranged by individual homeowners, this type of policy is specifically designed to cover communal buildings with multiple leaseholders and shared responsibilities.
What Building Insurance Covers
This comprehensive policy protects the physical structure and communal parts of the building, including:
- The main structure – walls, roof, foundations, windows, and doors
- Communal areas – stairwells, hallways, lobbies, and bin stores
- Outbuildings and communal facilities – such as bike stores, bin areas, and gates
- Accidental damage – such as fire, storm, flood, escape of water, or vandalism
- Property owner’s liability – protection in case someone is injured in or around the building and the RMC is found legally responsible
- Alternative accommodation– if flats become uninhabitable due to insured damage
- Costs for demolition and professional fees– such as surveyors or architects, should a rebuild be required
How the Cover Amount is Determined
Unlike personal home insurance, which might rely on market value or rough online estimates, building insurance for a block is based on a professional Reinstatement Cost Assessment (RCA). This is a valuation carried out by a professionally qualified practitioner such as a surveyor accredited by the Royal Institute of Chartered Surveyors (RICS). The RCA will show how much it would cost to rebuild the entire structure — including labour, materials, professional fees, and debris removal — in the event of a total loss event (such as a fire).
Reassessing the reinstatement cost regularly is important to ensure the building remains adequately insured and to avoid underinsurance.
How This Differs from Home or Car Insurance via Price Comparison Sites
- Tailored cover: Building insurance for a block is not a one-size-fits-all policy. It is custom-built for the complexities of leasehold living, including shared responsibility, communal spaces, and liability exposure.
- Professional valuations: Unlike online policies that rely on self-reported figures, block building insurance is underpinned by an accurate reinstatement cost assessment.
- Greater responsibility: Leaseholders do not arrange this insurance individually; it is usually organised by the Residents Management Company or freeholder, ensuring that all flats are protected equally under one collective policy.
- Specialist providers: These policies are sourced from insurers who specialise in residential blocks, not general consumer insurers.
Typically, Foster Kemp will engage a broker to undertake a market exercise and obtain three quotes from different underwriters. Based on the brokers recommendation, cover will then be placed with that selected underwriter. For organising this work the property manager will receives a commission of 10% of the premium.
In circumstances where the freeholder is separate from the RMC, they might organise the building insurance.
