Top 6 Insurance Policies you will need for Block Management

When it comes to managing residential blocks, the insurance policies required under the terms of the lease, plus your management agreement, are paramount.

The role of insurance requirements within the block management sector cannot be overstated. It serves as a linchpin in safeguarding the concerns of property owners while facilitating the seamless functioning of the entire property.

Making sure your insurance isn’t just a checkbox is crucial. It should be tailored specifically to cover everything your block needs. That includes the nitty-gritty, like the structure of buildings, communal areas, and the all-important public liability.

So, in this article, we’re going to explore the ins and outs of block management insurance. We’ll uncover why it’s so crucial, break down what it actually covers, and shine a light on the important things property owners should have on their radar.

Importance of Block Management Insurance

Having the right Insurance policies is an essential aspect of property management, as it safeguards property owners against a wide range of risks and liabilities. Whether you own a freehold or leasehold property within a residential development, having the right insurance coverage in place ensures protection against potential financial losses arising from unforeseen events. Such events can include damage to the building, loss of rental income, public liability claims, and more.

Coverage Aspects of Block Management Insurance

Buildings Insurance

One of the core components of block management insurance is buildings insurance, which covers the structure of the property’s physical integrity. This coverage extends beyond the mere walls and roof to encompass external elements, too, against risks like fire, flood, storm damage, subsidence, and vandalism.

Common areas: coverage for communal areas such as hallways, parking lots, and gardens ensures that any damage or accidents occurring within these shared spaces are not just acknowledged but are promptly and adequately addressed. Perhaps it’s a spilt paint pot in the hallway or an unexpected fall in the parking area; you can be assured that the block management insurance provides a financial safety net for the repair and restoration of these communal spaces.

Whether it’s the attractive façade that greets residents daily or the hidden complexities of structural components, making sure you have the correct building insurance will protect you against any of these unforeseen challenges.

Terrorism Insurance

It is crucial to consider that terrorism insurance is an important policy for the management company. This may prove difficult on the basis that the lease does not specifically refer to terrorism. However, a lease will state that the landlord is responsible for ensuring that there are all risks or usual risks covered in place, which would include terrorism.

You might want to refer to Qdime Limited v Bath Building [2014] UKUT 261 (LC), which deemed terrorism as a requirement of insurance. Also, in the event that an act of terrorism did occur and the building wasn’t covered against this, the responsible persons could find themselves being sued for not safeguarding the best interests of the lessees.

Engineering Insurance

When it comes to the lease and the unique characteristics of a property, it’s crucial to give engineering insurance some serious thought, especially if there are electrical installations like boilers, lifts, or electric gates. While many assume that these installations fall under the umbrella of the building’s insurance—and indeed, they often are covered for insured perils within the primary policy—it’s essential to recognise the limitations.

The catch is that when it comes to damages caused by technical faults or instances resulting in personal injury due to these installations, the standard coverage might not actually have you covered. In these cases, having dedicated engineering insurance is necessary, offering a safety net for scenarios that go beyond the scope of conventional policies.

Imagine your boiler malfunctioning or someone getting hurt due to a glitch with an electrical gate. These scenarios might not fall under the typical building insurance safety net, and that’s where engineering insurance comes into play. It’s the added layer of protection that ensures you’re covered for those unexpected hiccups that fall outside the usual perils covered by standard policies. As you navigate the complexities of property ownership, considering engineering insurance for those specific risks can be the strategic move that keeps your investment shielded from unforeseen technical challenges and potential personal injury liabilities.

Therefore, taking out engineering insurance provides you with the peace of mind that the installation has been inspected and considered fit for purpose. This inspection acts as almost an MOT, with a report being provided giving guidance on any repairs that are required in order to make it safe. This is definitely reassuring in a world where technical failures are a more common occurrence and where blame can be apportioned.

Public Liability

This is essential cover and is normally included in the building insurance automatically.

It is not the same as the Directors’ and Officers’ insurance cover. This cover is for legal costs and damages should a visitor to the building – a tradesman, postman or even a leaseholder’s friend – be injured on the premises. If it is found that the incident could or should have been prevented by the managers of the building, then the residents or right-to-manage company could be sued.

When insuring multiple blocks, common access roads and parking areas probably won’t be covered by block insurance, and separate cover should be arranged.

Individual residents (leaseholders) will not be covered for the consequences of their personal actions and need to check that their contents policy also provides public liability cover.

Employers’ Liability Insurance

If the management company employs staff or contractors, employers’ liability insurance is not just a box to tick—it’s absolutely essential. This type of coverage serves as a vital safeguard, acting as a shield against potential claims that could arise from employees experiencing injury or illness in the course of their duties.

Unforeseen accidents happen, and illnesses can occur without warning. Employers’ liability insurance steps in precisely for these situations, providing a financial safety net and legal protection against claims that employees may bring forth due to work-related injuries or illnesses.

While it’s easy to assume that workplace injuries are covered by general health and safety measures, having a dedicated employers’ liability insurance policy adds an extra layer of protection. It goes beyond the standard duty of care, acknowledging the unpredictability of real-world scenarios and ensuring that the management company is equipped to handle any unexpected challenges that may arise in the course of its operations.

Directors and Officers Insurance

Management companies may opt for directors’ and officers’ insurance, which safeguards the board members and executives against claims of negligence, mismanagement, or breach of fiduciary duties to provide the financial and legal support necessary to navigate such challenges.

Choosing directors’ and officers’ insurance is a proactive measure. It not only fosters a sense of security among those steering the company but also reinforces the organisation’s resilience in the face of unforeseen legal complexities. Selecting this type of insurance isn’t just a smart risk management move; it’s an investment in the long-term stability and reputation of the company and its leadership.

Key Considerations for Property Owners:

It is crucial for property owners to assess their coverage needs accurately. This includes considering the size and type of property, its location, and the specific risks associated with the area. Engaging with an experienced insurance broker can help navigate the complex landscape and tailor coverage to individual requirements.

Examining Policy Exclusions and Add-Ons:

Before finalising an insurance policy, property owners should conduct a thorough review to grasp any exclusions or limitations embedded within the coverage.

Additionally, it may be beneficial to explore add-ons such as legal expense coverage to ensure comprehensive protection.

Prioritising Maintenance and Risk Management: Implementing proactive risk management strategies and adhering to regular property maintenance are pivotal in mitigating potential risks.

Insurance providers are inclined to offer favourable terms and competitive premiums to properties showcasing thorough maintenance practices and robust risk management protocols. By emphasising these aspects, property owners will not only enhance the overall resilience of their coverage, but they may also benefit from cost-effective insurance solutions in the long run.

Comparison and Review

Periodically reviewing block management insurance policies and comparing quotes from multiple providers can help property owners secure competitive rates while ensuring adequate coverage. As the insurance market evolves, keeping up with industry developments and changing regulations is essential.

Conclusion

Block management insurance plays a vital role in protecting the interests of property owners and ensuring the smooth operation of residential blocks. By providing comprehensive coverage against a range of risks and liabilities, this specialised insurance offers peace of mind and financial security.

Property owners should carefully assess their coverage needs, review policy terms, and engage with trusted insurance brokers to secure the most suitable and competitive block management insurance for their investments. For further information, browse our comprehensive insurance service page.