Currently there is a lack of knowledge in the insurance market as to what to do when a freehold is owned by two or more individuals and either a proportion or all of it is occupied by the owners/leaseholders. Online insurance comparison websites provide very little guidance for freeholders in these situations. The questions asked on the websites do not probe for the relevant risk information that distinguishes a property owners risk from a shared freehold which is owner occupied. Where policies have been bought on this basis, they may be incorrect and thus the insurance may be void. This can be avoided by talking to an experienced broker who will be able to find an insurer who is happy with the property being owner occupied.
Property Owners Insurance is designed to cover a property owned by a freeholder, rented to either commercial or private tenants. Conversely, when a property is owner occupied and split into two or more flats it causes difficulties for the insurers in regards to the liability cover.
For example: Two shared freeholders living in their respective properties is the worst situation for an insurer.
- If you take out Buildings Insurance you get Public Liability as standard which covers you and the property
- If you take out Property Owners Insurance you don’t get Public Liability you only get Property Owners Liability as standard, leaving you exposed as an individual.
Terrorism cover is not automatically included either as commercial property owner policies have to provide their own cover in the UK. Therefore by not being insured on the right policy, you may be missing out on some key covers.
By using a broker’s expertise, you should be placed with an insurer who is comfortable with the property being (at least part) owner occupied. If you have taken out cover through an online comparison website, I would always recommend talking to your insurer over the phone to check that they are happy with the ownership and living arrangements of the property.
For more information contact firstname.lastname@example.org or call 0207 199 3258.