Blocks of Flats Insurance: Who Arranges It and What It Should Cover

One buildings policy, arranged by whoever controls the freehold, should protect the whole block. Here’s how that works — and what leaseholders should check for themselves.

Who actually insures a block of flats?

It depends on who controls the building, and there are three common answers. In many blocks the freeholder — sometimes an investor, sometimes the original developer — owns the structure and is obliged under the leases to insure it, recovering the premium from leaseholders through the service charge. In other blocks the leaseholders collectively own or control the freehold through a residents’ management company (RMC), a company set up to run the building, in which case the RMC arranges the insurance. And where leaseholders have taken over the running of their building through a right-to-manage (RTM) company, responsibility for arranging insurance generally passes to that company as part of its management functions.

Whichever structure applies, the lease is the starting point. Leases typically say who must insure, what perils must be covered, and sometimes whose interests must be noted on the policy. If you are a director of an RMC or RTM company, arranging suitable insurance is one of your core responsibilities — and one of the areas where getting it wrong causes the most friction with fellow leaseholders.

One building, one policy — on a full reinstatement basis

A block should be insured as a single building for its full reinstatement cost: what it would actually cost to demolish what’s left, clear the site, pay the professional fees and rebuild the whole block to current building standards. That figure is not the market value of the flats, and it is not the sum of what each flat might sell for. Rebuild cost and market value can differ substantially in either direction.

Underinsurance is the classic failure here. If the declared rebuild figure is too low, insurers may reduce claim payments proportionately — and on a partial loss affecting several flats that shortfall lands on everyone. A professional rebuild cost assessment, refreshed periodically and indexed in between, is the practical answer. It is far cheaper than discovering the problem after a fire.

The policy should pick up everything the leases make the insuring party responsible for: the structure and roof, common staircases and hallways, shared services, and usually outbuildings, boundary walls, car parks and grounds. Fixtures within individual flats — fitted kitchens and bathrooms, for example — are often within the buildings definition too, though leases and wordings vary, which is exactly why it pays to read both.

Liability for the common parts

Whoever controls the block is effectively the occupier of its common parts, and owes visitors and residents a duty to keep them reasonably safe. Property owners’ liability cover responds if someone is injured or their property is damaged and the freeholder, RMC or RTM company is held legally responsible — a fall on a poorly lit staircase, a slip in an entrance hall, masonry falling from a parapet. If the company directly employs anyone, such as a caretaker or cleaner, employers’ liability cover will generally be needed as well, and the policy should reflect that.

Terrorism cover is an option — decide it deliberately

Standard property policies commonly exclude damage caused by terrorism, and cover can usually be added back as an optional extension. Whether to buy it is a genuine decision for the freeholder or board rather than a default: some mortgage lenders on flats within the block expect it, and some leases arguably require the fullest available cover. What matters is that the decision is made consciously and recorded, not discovered as a gap after the event.

Lifts, plant and inspection

If the block has passenger lifts or other mechanical plant, periodic engineering inspection by a competent person is generally required under UK safety legislation, quite apart from any insurance question. Inspection contracts are often arranged alongside the block policy for convenience, but the two are different things: one is a legal compliance obligation, the other is insurance against breakdown or damage. Boards should know which they have, keep inspection reports on file, and act on defects promptly — an unactioned report is exactly the kind of document that complicates a later claim.

Leaseholders: check what the block policy actually covers

If you own a flat in the block, the buildings policy is arranged for you, but it is still your problem if it’s wrong. Ask the managing agent or board for the policy summary and check three things. First, that the building is insured on a full reinstatement basis and the sum insured looks credible. Second, what the excesses are — escape-of-water and subsidence excesses on block policies can be much higher than a homeowner would expect, and leases differ on who bears them. Third, where the buildings cover stops: it will not cover your furniture, carpets in most cases, clothing, electronics or personal possessions, and it may not cover improvements you have made beyond the original specification.

That last point is the recurring surprise. The block policy protects the building; your contents are yours to insure. A leaseholder with no contents policy after an escape of water is often shocked to find the block insurer repairing the ceiling but not the ruined belongings beneath it.

How Apex helps

Apex Insurance Brokers is an independent, FCA-authorised broker (FRN 724952) based in Bristol. We arrange cover for blocks of all sizes — freeholder-owned, RMC and RTM — and we’ll read the leases’ insuring obligations against the policy wording rather than assuming they match. If you sit on the board of an RMC or RTM company, ask us about directors’ and officers’ cover at the same time: the block policy protects the building, not the people making decisions about it.

Frequently asked questions

Who is responsible for insuring a leasehold flat’s building?

Whoever the lease says must insure — usually the freeholder, or the RMC or RTM company where leaseholders control the building. Individual leaseholders normally insure only their own contents.

Does the block policy cover the inside of my flat?

Usually the fixed parts — walls, ceilings and often fitted kitchens and bathrooms — but not your possessions, and possibly not improvements you’ve made. Check the buildings definition in the wording and the terms of your lease.

Do we have to buy terrorism cover?

It’s generally optional, but some lenders and some lease interpretations point towards having it. Treat it as a board-level decision, take advice, and record the reasoning either way.

We’re volunteer directors of our RMC — are we personally exposed?

You carry real directors’ duties even though you’re unpaid. See our companion guide to D&O insurance for RMC and RTM directors.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is a general guide, not advice on your own lease or policy; wordings differ, so always check your documents or ask us.