Anyone who has an ‘insurable risk’ can take out insurance. That is anyone who stands to lose money in an event during or linked to your occupation of a property. This generally excludes your contents, which may need separate cover.
If your rental agreement or lease requires you to take out building insurance then you must do so with an ‘authorised insurer’. Often the lease provides for the landlord to arrange the insurance of the building and charge you the cost.
This is the normal arrangement particularly for buildings divided into flats or multiple occupancy as it is important that there should be one policy covering all risks to the building as a whole. If you pay towards the cost you can ask to see the policy or a summary The request should be made in writing and the landlord must comply within 21 days of receiving it.
Some leases, usually of houses, require the leaseholder to insure the property with an insurer nominated or approved by the landlord. Under provisions in the Commonhold and Leasehold Reform Act 2002 the leaseholder of a house is entitled to place the insurance with his own choice of insurer, as long as he gives notice to the landlord and complies with certain requirements relating to the cover arranged.
The insurance arranged by the leaseholder must:
- be with an ‘authorised insurer’, which means an insurer operating within the requirements of the Financial Services and Markets Act 2000;
- cover the interests of both the leaseholder and the landlord;
- provide cover to a sum not less than the amount required under the lease;
- cover all the risks which the lease requires be covered by insurance.
If you want to use a cheaper insurance policy you must comply with the above requirements and be prepared to argue you case at a Leasehold Valuation Tribunal.
For more information www.lease-advice.org