Frequently Asked Questions About Insurance
Belinda Thorpe, Managing Director at Residentsline, covers some of the questions that are regularly posed to her and her team.
How can I avoid water damage in my flat?
There are many things you can do to reduce your risk of water damage from preventative measures to know what to do should disaster strike. A few pointers are below and you can read our full advisory PDF here.
- Ensure all pipes and tanks exposed to winter temperatures are well insulated
- Only use approved contractors when maintenance, repairs or replacement works are carried out
- Annually check that the seal around your bath and/or shower is water tight
- Replace washers in leaking taps and overflowing cisterns as soon as possible
- Ensure “shut off” valves are located in easily accessible places and that you know how to use them
What to do in the event of a leak:
- Turn off the water supply stop cock.
- Drain water pipes and tanks. Once the water heating systems have been shut down, turn on the taps to help drain the system fully of the remaining water to minimise damage.
- If applicable, warn the occupiers of the flats directly below so that steps may betaken to reduce the likelihood of any damage to their properties.
- Should the ceiling begin to bulge consider piercing the plaster with a wooden broom handle or similar implement to release the water and prevent the ceiling from collapsing.
How is our insurance premium calculated?
Firstly your property information will be requested as well as information about the surrounding area, for example, whether you are aware of flooding in the locality or if your adjacent properties have suffered from subsidence.
Once the underwriter has collated this information he/she will normally check the “experience” of the area.
Subject to the block conforming with the Insurer’s underwriting criteria, most specialist intermediaries will have the authority to apply a “rate” to your reinstatement cost (Declared Value or Sum Insured – see below) to apply to your sum insured, for example:
£1,000,000 (Declared Value/Sum Insured) x 0.080 (example insurance rate) = £800.00 + 12% IPT (Insurance Premium Tax) = £896.00.
The premium quoted for this block would be £896.00.
For further details, see our informative PDF on the subject.
Do we need Terrorism Insurance for our block of flats?
Damage to your block of flats by an act of terrorism may seem incredibly unlikely but only one question needs to be asked… if it happened, who would provide the funds for rebuilding your property?
Did you know that if a terrorist attack were to happen close to your block of flats, the resultant or collateral damage would not be covered unless you had arranged Terrorism Insurance?
As a responsible Officer of your Residents’ Management Company you have a duty to protect lessees and residents from unforeseen events wherever possible. By adding Terrorism Insurance when arranging or renewing your Residential Buildings Insurance, you are also protecting your own and your fellow flat owners personal assets.
For more information, have a look at our useful guide.
Should we add VAT to our Declared Value, or not?
If your block is completely destroyed, is demolished to ground level and has to be rebuilt – these costs do not attract VAT.
However, if your block is 90% destroyed and Insurers decided to rebuild your block rather than knock it down and rebuild it totally – these costs would attract VAT at 20%.
There are those that think it would be rare that Insurers would choose to rebuild where a property was 90% damaged however, this is quite a risk to accept!
For more info, have a read of our PDF.
What is the difference between a Sum Insured and a Declared Value on my Policy Schedule?
This question comes up time and time again and we can see why!
Your Policy Schedule will often show two values: one referred to as the Declared Value and the other as the Sum Insured. The difference between these two figures is simply how the insurance contract handles inflation during the insured period.
The Declared Value is simply the cost to rebuild your property in full, however you do not need to add any increase for inflation during the insured period or during the time it takes to rebuild the property following a claim.
A “Day One” Clause provides protection against the effects of inflation during the period of insurance for a given percentage uplift figure. The percentage uplift will vary from insurer to insurer but will typically be between 10% and 50%.
The insurers still require a rebuilding figure to be given to them, known as the “Declared Value” and in return they will confirm what the total Sum Insured equates to inclusive of this Day One protection.
For further information, head to our guide.
Do we need Cyber Liability Cover as an RMC?
The usually high volume of sensitive customer information being stored, processed and held by RMCs means that cyber insurance should be viewed as an essential tool in your day-to-day operations.
Cyber risk is no longer ‘an IT issue’, it should be viewed as a ‘company issue’; vital to the ongoing profitability and success of every organisation. You need to protect your business’ information, customers, clients and all of your online data with a cyber insurance policy you can truly rely on.
For more information, have a read of our information page.
Are carpets covered under our flats insurance?
This is one of the questions we have been told that Property Managers get asked, time and time again.
The simple answer is “No” but to explain further…
When it comes to your insurance, carpets can seem like a grey area – are they part of the fixtures and fittings or are they contents? Although you would normally leave them “in situ” if you sold you flat, if you decided to you could actually roll them up and take them with you.
In a nutshell, if the event of a claim, your insurer should pay for restoring and replacing any “resulting” or “consequential” damaged areas- for example, re-tiling. These areas could include damaged ceilings and some flooring.
Generally, whatever would remain in your apartment if you picked it up and turned it upside down is covered by your buildings insurance…apart from your carpets as, if you sold your apartment you could take them with you. Hard floorings for example, wooden floors, laminate flooring and LVT (luxury vinyl tiles) would be covered.
We hope that clears things up!