Question 1

Paying Insurance Premiums

Accepted Answer

Q: We as the RTM for our flats have, for a number of years, arranged buildings insurance cover on behalf of the freeholder. There does seem to be an anomaly however: the policy which we took over a few years ago contains cover for the freeholder’s loss of rental income (from the four flats out of 12 which he stills owns and which have no leases) and also contents cover for these four flats. We think that these two specific elements should not come under the remit of the RTM, or costs borne by leaseholders as part of service charges, as they are not part and parcel of the common parts and fabric of the building for which we have responsibility. The logic we see is that the freeholder is not expected to contribute to any individual leaseholder’s contents cover or loss of rental income, so why should we pay for his? The freeholder has made it clear we have absolutely no remit where it comes to management of his own four flats. Are we right and can we claim an annual repayment for these portions of the premium? Can we claim it retrospectively? Could we in fact ask our brokers to remove this part of the buildings insurance policy and ask the freeholder to sort that out for himself? Would that be a better way of keeping the elements separate? FPRA Insurance Expert Belinda Thorpe replies You shouldn’t remove units from a block of flats policy, as if they did not renew their insurance the whole block could potentially not rebuilt in the event of a complete loss. With regards to the logistics around the payment of costs and recovering premiums paid from the freeholder, this really needs a legal consultant’s comment. Question submitted June 2018

Question 2

Paying Insurance Premiums

Accepted Answer

Q: We as the RTM for our flats have, for a number of years, arranged buildings insurance cover on behalf of the freeholder. There does seem to be an anomaly however: the policy which we took over a few years ago contains cover for the freeholder’s loss of rental income (from the four flats out of 12 which he stills owns and which have no leases) and also contents cover for these four flats. We think that these two specific elements should not come under the remit of the RTM, or costs borne by leaseholders as part of service charges, as they are not part and parcel of the common parts and fabric of the building for which we have responsibility. The logic we see is that the freeholder is not expected to contribute to any individual leaseholder’s contents cover or loss of rental income, so why should we pay for his? The freeholder has made it clear we have absolutely no remit where it comes to management of his own four flats. Are we right and can we claim an annual repayment for these portions of the premium? Can we claim it retrospectively? Could we in fact ask our brokers to remove this part of the buildings insurance policy and ask the freeholder to sort that out for himself? Would that be a better way of keeping the elements separate? FPRA Insurance Expert Belinda Thorpe replies You shouldn’t remove units from a block of flats policy, as if they did not renew their insurance the whole block could potentially not rebuilt in the event of a complete loss. With regards to the logistics around the payment of costs and recovering premiums paid from the freeholder, this really needs a legal consultant’s comment. Question submitted June 2018

Paying Insurance Premiums

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