Legal advice from David Jones, a specialist commercial paralegal at FDR Law in Palmyra Square, Warrington
Insurance on leasehold house
Q: I own a 999 lease on a residential house and my landlord has contacted me and said that I need to use their nominated insurance company for my home insurance. Do I have to change insurers?
A: Over the last few months I have had a number of enquiries from tenants with 999- year leases who have been told they need to use the landlord’s nominated insurance company for home cover. This is usually much more expensive than that provided by their current insurer.
In most cases, the landlord encloses a copy of the underlease which usually states that the lessor must approve the insurance company used by the tenant. The landlords then refuse to approve any insurer unless it is their chosen one.
Although the underlease may indeed state that you must use the landlord’s approved insurer, section 164 of the Commonhold and Leasehold Reform Act 2002 states that you are not required to do so long as you already have sufficient cover in place and that the cover complies with a number of requirements.
The insurer must be authorised and regulated, and the insurance must cover the interests of both parties. It must also cover the minimum sum required, as well as the required risk criteria under the lease. The leaseholder must also provide notice to the landlord within 14 days of taking out the insurance (or its last renewal) or within 14 days of any new landlord’s request.
There is a prescribed form to fill in, but it doesn’t take much work. It is simply a case of checking that the notice is within the prescribed time limit and completing one page to confirm the insurance policy details.
Please bear in mind that the above only applies to houses, not flats.