Frequently Asked Questions
Why does the Council insure the buildings for leaseholders?
In accordance with our leases, it is the responsibility of the Council to arrange building insurance on behalf of the leaseholder. The Council's obligation as a freeholder is to ensure consistent insurance coverage for the benefit of both the leaseholder and the freeholder.
The leaseholders' insurance policy covers buildings, including common parts and areas where the leaseholder is responsible. This includes areas such as roofs, walls and main entrance doors.
The only time a leaseholder could arrange their own buildings insurance is if their lease says they are responsible for arranging their own buildings insurance.
Further details are available on the Leasehold Advisory Service website.
When does the current building insurance contract expire?
The current contract with Aspen is due to expire at midnight on 31 July 2023.
What is the process for getting a new insurance provider?
Local Authority leasehold insurance is a very specific market with limited suppliers. The Council has a procurement process that outlines the process officers must follow for procuring a new insurance provider.
The Council has utilised an 'Open Tender' procedure; this means the contract is open to any insurance supplier able to offer the required cover. However, Local Authority leasehold insurance is a very specific market with limited suppliers. Unfortunately, price comparison websites you may use at home for private insurance are unavailable.
As part of the process, the Council is required to carry out statutory consultation called Section 20 consultation. This means we issue a Notice of Intention and a Notice of Estimate. The Notice of Intention was issued on 23 February 2023 and was valid for 30 days.
Following the Notice of Intention, we received some comments from leaseholders and have responded to the consultation. These are included in the Notice of Estimate.
The Notice of Estimate will last 30 days, and the contract award is expected to take place on 26 July 2023.
Insurance market issues
The current insurance market is challenging. Inflation increased rebuilding costs, and supply chain pressures for building repairs are pushing up premiums.
The impact of increased severe weather, such as storms, floods and fires, has also affected the insurance market nationally due to higher claims costs. This has led to many insurers leaving the market, causing an even smaller pool of providers to choose from. In turn, this has driven up the price of premiums and has even meant some councils have not been able to secure any insurance providers. Fewer providers are prepared to quote, resulting in significantly increased premiums. This is sadly beyond the Council's control.
Claims numbers and costs have also increased significantly. Claims costs have exceeded premiums in three consecutive years; at the same time, the average cost of a claim has risen from approximately £1,700 to £8,500.
Market conditions have worsened during the procurement process, and there is no sign of any new suppliers offering local authority leasehold cover.
Insurers consider the claims record for five or more years when setting a premium, and the contract period of five years allows the claims record to settle.
We have no guarantees on pricing or what the future holds regarding claims costs, inflation and insurance market pressures. Still, the five-year contract will hopefully provide some stability of cover and price for leaseholders during this uncertain period in the market space and reduce the risk of being unable to place the cover.
Under the new contract how much will I pay?
From the tender process, the table below gives the annual cost under the proposed agreement with each property charge based on the number of bedrooms it has. We have seen an increase in the cost of premiums for leaseholder insurance; generally, insurance costs have increased across the board. Most landlords have seen an increase in the cost of premiums for their leaseholders.
Number of bedrooms | Charge (Including Insurance Premium Tax at 12% and £25.00 administration costs) |
0 | £302 |
1 | £427 |
2 | £531 |
3 | £628 |
4 | £689 |
Garage with a leasehold flat | £23* |
Stand alone garage | £33** |
* There is no administration fee for the garage
** Inclusive of £10.00 administration fee
The above table shows that the insurance premium increases when the number of bedrooms increases. Therefore, if you live in a three-bedroom property, you will pay more than someone living in a one-bedroom one.
How will the payment be taken?
Building Insurance premiums are invoiced on and around 1st week of August. Leaseholders may pay their Building Insurance charge in full or three monthly instalments free of interest.
What aspects/areas does the insurance cover?
Cover to Include
• Fire
• Lightning
• Explosion
• Earthquake
• Subterranean Fire
• Aircraft & other Aerial devices, or any articles dropped from them.
• Riot & Civil commotion, strike, labour or political disturbances
• Malicious Damage
• Storm and Flood
• Escape of Water
• Impact by any Vehicle or Animal
• Theft or Attempted theft
• Subsidence, Landslip and Heave
• Removal of Debris, Demolition, Shoring up Costs etc.
• Escape of Oil
• Falling aerials or satellite receiving equipment, solar panels, wind turbines and security equipment, their fittings or masts.
• Falling Trees, Telegraph Poles, Pylons or Lamp-posts
• Full Extended Accidental Damage*
• Accidental Damage to drains, pipes, cables and underground tanks used to provide services to or from the buildings
• Accidental Damage of fixed glass, double glazing (including the cost of replacing frames), solar panels, sanitary fixtures and ceramic hobs all forming part of the Buildings.
• Property Owners' Liability
• Alternative Accommodation costs
*Please note that whilst sub-let properties are covered, this excludes accidental damage and theft.
You will receive further information, including your policy and insurance renewal documents.
In the event of an accident in my building, who do I contact, and who deals with the insurance claim?
Once we have awarded the contract, we can provide the details of who to contact to make a claim.
What is the level of excess if I make an insurance claim?
The applicable policy excesses, in the event of an insurance claim, are:
£100 for property owners' liability
£1000 for subsidence
£250 for all other perils.
Who would I speak to if I need further information?
The Council appreciates you may have some questions about the process or the insurance itself. We understand that with the cost-of-living crisis, this increase in insurance coverage is unwelcome for residents, especially in the face of a general increase in the cost of living.
However, the Council as a freeholder is obliged under the lease agreements to arrange buildings insurance and recharge to leaseholders via the service charge.
If you are concerned about the cost of living, please access the Council's website: