Building Insurance for Leasehold Flats: Who Arranges It and What It Covers

Who Is Responsible for Buildings Insurance?

In a leasehold building, it is the landlord's responsibility — not the individual flat owner's — to arrange buildings insurance for the entire structure. This is almost universally required by the lease and reflects the practical reality that a block of flats is a single building: insuring individual units separately would be unworkable and would leave shared structural elements uninsured.

The cost of the buildings insurance premium is recovered from leaseholders through the service charge, usually apportioned by flat size or lease share. You pay for the insurance, but you do not choose it or deal directly with the insurer in most circumstances.

What Block Buildings Insurance Typically Covers

A standard block buildings insurance policy covers:

• **The structure of the building** — walls, roof, foundations, floors, staircases
• **Communal areas and fixtures** — lifts, communal heating systems, entrance halls
• **Individual flat interiors** (structural elements) — depending on the policy, this may include fitted kitchens and bathrooms within your flat, but generally excludes contents (your furniture, clothes, electronics)
• **Accidental damage** — usually as an optional addition
• **Liability insurance** for the building owner

Buildings insurance for a leasehold flat does **not** cover your personal contents. You will need a separate contents insurance policy for your belongings. Some block policies also exclude or limit cover for subsidence, flooding, or other specific risks in high-risk areas — check the policy schedule.

Reinstatement Value vs Market Value

Buildings insurance must be for the **reinstatement value** of the property — the cost of rebuilding it from scratch if it were completely destroyed — not the market value. In high-value areas, the market value can significantly exceed the rebuilding cost; in others, they may be similar.

If a building is under-insured (the sum insured is less than the reinstatement value), the insurer may apply "average" — reducing any claim payment proportionally. For example, if a building insured for £5 million has a true reinstatement value of £10 million, a claim for £500,000 might only result in a payment of £250,000.

Leaseholders have the right to request a copy of the insurance policy and to ask when the building last had a formal reinstatement valuation carried out. A valuation should be done by a RICS-registered surveyor at least every three years and updated in line with construction cost indices annually. If no formal valuation has been done recently, this is a legitimate concern to raise with your managing agent.

Insurance Excess

Most block insurance policies include an excess — the amount the building owner must pay from the service charge before the insurer meets a claim. Excesses of £1,000 to £5,000 are common; in high-risk buildings or after a history of claims, they can be much higher.

The insurance excess is typically recharged through the service charge if a claim is made, meaning all leaseholders share the cost. However, some leases or managing agents charge the excess to the leaseholder whose flat was the source of the damage. Check your lease for the relevant provisions.

Challenging an Inappropriate Policy

If you believe the buildings insurance policy is unsuitable — wrong cover level, unreasonably high premium, or a conflict of interest (the managing agent is receiving undisclosed commission from the insurer) — you have rights:

• You are entitled to a summary of the insurance cover and to inspect the policy
• Under the Leasehold and Freehold Reform Act 2024, landlords must provide greater transparency around insurance arrangements, including disclosure of commissions
• If you believe the policy was placed at an inflated premium due to undisclosed commission or a connected-party arrangement, you can apply to the First-tier Tribunal (Property Chamber) to challenge the insurance cost as part of the service charge

Contents Insurance: Your Own Responsibility

Remember that you are responsible for insuring your own contents. Some insurers offer "leaseholder contents" policies specifically designed for flat owners, which include trace and access cover (the cost of finding a leak source) and accidental damage to internal decorations and fixtures that are your responsibility under the lease.

Including Insurance in Your Cost Planning

Buildings insurance typically represents a meaningful proportion of annual service charges, particularly in older buildings, high-rise blocks, or developments with a history of claims. Our [leasehold cost calculator](/leasehold-cost-calculator) allows you to include insurance cost estimates alongside all other service charge components, giving you a complete and accurate picture of your annual leasehold running costs.