March meeting: Block Insurance Policy

Published on: Mar 14, 2013

I put my hand up. I forgot to update the website with details of tonight’s meeting. But you all knew today was the second Thursday of the month so I hope I can be forgiven. Tonight we have Brendan Sexton, an insurance broker with First Ireland in to talk to us about your block insurance policy, what to look for, how to value it and everything else you wanted to know. We also have lots of new members with eager faces keen to ask questions and learn more.

For those of you who couldn’t attend, here are most of the things that Brendan covered.

The three main factors that impact premiums are:

  • Rebuilding sums insured
  • Claims experience
  • Policy excess

The first one should be based on a professional valuation of the rebuild costs of your block. It is very important to do this every 3-5 years. If you don’t do this, you could be overpaying your premium every year. Worse still, if your policy is undervalued, you could find that there isn’t enough money to rebuild it fully should the worst happen.

Choosing a higher excess can help reduce your premium so always ask an insurer for options where possible. If the claims experience is bad, insurers may force a higher excess. You can also opt to exclude some items for the policy such as wooden floors or Italian tiles which can be expensive to reinstate. This can help to reduce your premium.

Your claims experience is usually over the last five years. It is essential to keep a close eye on your claims as a bad claim history can follow you for a long time.

Most insurance companies won’t deal with OMCs directly, only through a broker. Make sure to ask your broker what insurance companies they deal with. Small to medium brokers won’t have access to some of the larger insurance companies. If you would like to verify your broker is doing a good job, you could ask a second broker to get some quotes for you. Don’t ask several brokers in the same renewal period as insurance companies are likely to decline to quote.

Quotation process

The quotation process should start about two months before the renewal date. Insurance companies are unlikely to deal with you if you approach them too late.

The most most important thing you need is your five year claims history. Your broker will need to write to each company that covered you during the last five years and ask them for the claims history. It should take no longer than a week to collect the information.

The following other information will also be required. Your broker will probably be able to answer them but a new broker will ask you this.

  • current insurer, renewal date and excess
  • address
  • overall number of units split between apartments and duplexes
  • approximate age
  • number of blocks
  • number of stories
  • construction: wall types, roof type, floor type
  • fire detection and protection details
  • how far away is the nearest waterway
  • any special details

Other things you might want included

  • Alternative accommodation . Generally this is valued at 25% of the rebuild value.
  • Fire department charges. This is only for a callout where extinguishment is needed. If they are called out because of a faulty fire detection unit, you may be charged but the insurance generally won’t cover it.
  • Trace and access: help identify the source of a leak which isn’t immediately obvious. It covers physical damage caused by tracing the leak
  • Common area contents such as carpets in the lobby or stairwell
  • Landscaping costs – this covers damage to landscaping caused by (for example) the fire brigade when putting out a fire
  • Day one inflation provision
  • Employers liability for minor property repairs (covers any contractors you may have eg cleaners, repairmen)
  • Public liability

What to expect for your broker

  • promptly handle any queries from the directors or agent
  • accept claims notifications from authorised people only
  • review insurance company surveys with the agent and negotiate as needs be. The insurer may check the estate for blocked drains, chipped steps, unserviced fire alarms, etc. It may be possible to argue with the insurer that not all will be done immediately. Risk improvements or recommendation items can be argued or postponed. Risk requirements must be done to comply with the policy.
  • check the adequacy of insurance of contractors
  • arrange and monitor direct debit or premium payment facilities
  • forecast insurance costs for upcoming budgets
  • get updated claims history two months prior to renewal
  • discuss any solutions to common or recurring problems which triggered claims
  • prepay a submission and market to all relevant insurers
  • carry out final negotiations with competitive insurers

Lifts

Regular six monthly inspections are required by law for all lifts. This is in addition to any regular maintenance. Any work items arising from the inspection must be complied with.

Insurers may refuse to pay for a claim arising from a lift which does not have a valid statutory inspection certificate.

The inspections must be done by an independent person. They cannot be the same person or company who do the regular maintenance.

Most insurance companies offer competent people who can do the statutory inspections. It is possible to hire someone else but their qualifications and competency could later be questioned by a judge in court. It is not necessary for the same insurance company to provide both block policy and lift inspection. Your statutory inspections may be covered by your lift insurance policy.