Flat / Homeowners Mis-sold Buildings Insurance

Kay International, a leading commercial insurance broker has warned that owners of residential flats and houses converted into flats, may well be incorrectly insured.

Neil Cook warned that 'I come across many flat owners who are dual insured after being misled, I believe, when insurers are selling policies to individual flats , often attached to a mortgage sale process, when the entire block is covered by the owner under a single policy'

This leads to properties being dual insured.  It is normal for a block of flats to have protection for the entire block and for the leaseholders to be charged for their buildings isnurance as part of their service charge. Neil Cook believes that nearly 10% of flat owners however have purchased additional cover which is not required.

He added: "recently even a family member was in the process of remortgaging she was persuaded to take cover, when she already had it! Problems are also arising when a lender knows a building is insured - this will have been clarified before a mortgage was finalised - but still offers a borrower insurance. The crux is they are trying to take money when they don't have to. This can cause confusion."

"Eight separate policy holders may be paying between £200 and £300 a year but a freeholder's policy for the whole building may be proportionally half this amount.  If the freeholder has not taken out an individual policy to cover the housing block, the first step is to approach them to see if this can be arranged.   Failing that, residents should club together and form their own resident's association and take out a policy in the name of, for example, 123 The Avenue."

Neil says paying to form a limited company is not necessary, becoming an association will suffice and is free.

"This document must also prove the interest of the freeholder, acknowledging they own the freehold, as a note to whoever owns the property and the names of the lenders.  This is to show the current insurable legal interest, as insurance is a condition of mortgage."

A key reason residents who do not club together encounter problems is because insurance company computers only recognise a single name for the policy and will not accept multiple names such as Mr Smith, Mrs Jones and Ms French.

Neil says unmarried couples commonly experience difficulty gaining joint policies because of this.  He said: "Modern brokering is very computer-focused. If the computer rejects the information, the policy is often rejected too.

"It is typically direct insurers who do not sell covers for blocks of flats but are happy to issue policies for individual units, as these systems are geared towards a single name. Mr/Mrs Smith for example, policies only." 

"People just don't realise this is happening. Hopefully they will and action will be taken." Against the wrong doers . WE WILL GLADLY HELP ANY ONE WHO HAS BEEN MIS SOLD GET THEIR MONEY BACK

Superquote.com works with Neil and Kay International to offer insurance for freeholders of blocks of flats.