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All You Need to Know About the Increase in Building Insurance Premiums for Flats

Housing-Market / Insurance Jul 29, 2022 - 08:19 PM GMT

By: Boris_Dzhingarov


If you’ve not heard about the cost of living crisis, then you must have been living under a rock. Expenses are going up while wages are going down and the consequences can be felt across the country. Whether it’s the eye-watering cost of filling up your car or the hike in the bill when you finish your food shop, rising costs are affecting everyone.

Insurance premiums are just one of the casualties.

Insurance experts like Deacon describe leaseholders as sitting ducks when it comes to insurance since paying their share of the premium is often mandatory under the terms of their lease. Furthermore, it’s the most expensive thing that leaseholders pay on their service charge bill, and they don’t have a lot of control in the choice of provider.

Additionally, it likely doesn’t make anyone feel any better to know that increases are being seen across the whole property market and not just for blocks of flats building insurance.

 So, if this increase is so widespread, is there anything that can be done?

Despite the widespread rise, it’s still worth shopping around to find the best deals. Whether the one in charge of managing a block of flats is a property agent or residents management company, it’s a good idea to challenge renewal premiums instead of blindly accepting them without doing any other research. Depending on how knowledge or confident someone feels about doing this, they can also hire an insurance broker who will do the shopping around and challenging for them.

The main take away is this: if you are an individual leaseholder and you are concerned by the jump in your share of a rising premium, don’t be afraid to stand up for yourself and hold the managers of the block to account.

Why are buildings insurance premiums going up in the first place?

There are various factors involved that are causing buildings insurance premiums to skyrocket. The first and foremost is that the cost of rebuilding or repairing damage to a building is rising significantly. It’s estimated that it would have cost £500,000 to rebuild a block in 2020 yet in 2021, in just the short space of a year, those bills for the same rebuilding project will have shot up to £544,000. The worrying rise in building costs is becoming a damaging problem to the construction industry and homeowners alike. From the beginning of the COVID-19 pandemic, production and transportation of building materials took a large hit. Just as the industry began to make tentative steps towards recovery, the conflict in Russia and Ukraine sparked another setback and further spiralling prices.

While you clearly have no control over these massive global issues, there are some smaller issues that influence your prices that you can control to keep primum price increases to a minimum.

  • Check the value of your property. Make sure that the block of flats is insured for the correct amount by comparing the Buildings Declared Value on your policy document with an estimated provided by a revaluation of the property. In this way you can be confident you will not be exposed to the monetary risks involved with being underinsured.
  • Reduce the number of claims. Claims history has a big impact on your premium. Prevention is key as repeated claims for the same issue will cause your premiums to go up significantly. Many common issues are easily preventable with the right tools and insight. Carry out regular checks and precautions to identify problems before they progress to the stage that you need to make a claim.

By Boris Dzhingarov

© 2022 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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