Are some leaseholders being ripped off over building insurance?

The Observer has covered a story regarding leaseholders sharing commission on buildings insurance - The paper has quoted one of our partners, Neil Cook, of Kay International.

Essentially their investigation has highlighted the potential risk that commission hidden from the leaseholder is being charged by managing agents.  Some leaseholders could be paying twice the normal rate for cover because the management company are selecting a policy based on commission level rather than the best value for money cover.

Insurance broker Neil Cook, of Kay International , told the Observer that he is being approached by increasing numbers of leaseholders who are being charged significantly above the going rate.

"I see a lot of inflated premiums for blocks of flats where it just doesn't add up, and there is no way the managing agent has sought the best deal," he says. "Sometimes it is as much as double but, typically, the premium is about 30% above what you would expect to pay."

One leaseholder, who does not want to be named, learned he was paying over the odds only after he and other residents took over the management of their south London flats in October last year.

"When we got hold of the paperwork we saw that the company that managed the block was paying £6,632 a year for buildings insurance," he says. "Without too much difficulty, we managed to get the premium down to £3,731."

The Financial Services Authority does not protect leaseholders from this arrangement as they are not directly involved in the contract with the management agent.

You can contact Neil Cook on 0208 850 9697 if you are looking for commercial landlords insurance or insurance for a block of flats.