Insurance FAQs

Q. What is the Buildings sum insured?



Q. What does ‘building declared value’ mean?




Q. What happens if you do not insure for the correct amount?

A. It is a requirement of any policy to insure for the full rebuilding cost (see the previous two questions). If you do not, insurers will apply a clause called the ‘condition of average’.

This means that if you have only insured for half the correct rebuilding cost then, in the event of a claim the insurers only have to pay half the claim.

In the event of a total loss, you would potentially find yourselves having to personally fund the difference to complete repairs.

In the event of a claim (particularly a large one) insurers will ask the loss adjuster investigating the claim to check if the declared value is adequate.

Q. Why are property valuations important?

A. Failing to insure your building for the correct value can be disastrous.



The valuation exercise should be repeated every three to five years, as although insurers may index-link the sum insured each year, this is based on national indices and the actual cost changes can vary on a regional basis over time. So over time, your declared value may vary from the true buildings valuation.

Q. What is meant by index – linked increase to declared value?

A. At each renewal the insurer will apply an increase to the declared value to reflect the annual percentage increase shown in the Building Cost Information Service (BCIS) Index. The index takes into account the annual increase in building costs therefore allowing the declared value to keep pace with actual costs. The index is issued by the Royal Institute of Chartered Surveyors (RICS).

Q. Is terrorism cover included in our block insurance policy?

A. Terrorism cover is not included in normal block insurance policies. If cover is required is has to be added to the policy for which the insurer will charge an additional premium. The level of premium will reflect the perceived risk.

Q. What is property owners’ liability?

A. Any person or company who owns or uses property has a legal duty to provide a safe environment for visitors and any other person legally on the premises eg. visitors, contractors, postman.

If you fail in this duty of care the Owners’ Association could be held legally liable for the injury resulting in huge costs and damages being awarded. Property owners’ liability will protect you against these costs.

It's also worth noting that an injured party may choose to sue any owner or group of owners - not necessarily a committee member or the Owners' Association. The arguments put forward in Court ( however ridiculous ) have to be answered by someone - so this insurance covers legal fees to protect all owners.

Q. What is directors’ and officers’ cover?

A. When you agree to act for a residential management company / owners’ association in a formal capacity as a director (or on an informal basis as a committee member), under company law you are treated no differently to a director of a major PLC. So if you, or your fellow directors / committee members, make an innocent error or fail to do something you should, you can be held personally liable for the financial consequences.



Q. What is meant by ‘trace and access’ cover?

A. The majority of claims made are water related and the source is not always apparent. To find and solve the cause of the loss can be a time-consuming and expensive process. It could involve dismantling walls and drilling holes in floors throughout a building.

‘Trace and Access’ covers the costs of finding the leak and repairing the damage made to access the source of the water leak.

Insurers will place a limitation on the ‘Trace and Access’ element payable on each claim.