In today’s challenging economic climate, rising insurance premiums add to the burden of the cost of living. This is particularly true for leaseholders, who often have little say in selecting their buildings insurance provider. The problem is not limited to flats alone; the wider property market is also experiencing these increases. However, there are measures that both individual leaseholders and block managers can take to mitigate these rising costs. Understanding the reasons behind the premium hikes and implementing appropriate strategies can help alleviate the financial strain.
What Factors Are Influencing the Increase of Premiums?
Two primary factors contribute to the upward trend in buildings insurance premiums: the rising cost of rebuilding or repairing damaged structures and the growing number of insurance claims. While it is impossible to predict future price fluctuations accurately, insurers value well-managed blocks with a history of fewer claims. This can result in lower premium quotes. Although global issues are beyond anyone’s control, there are management practices that can influence premium increases and keep them in check.
What Strategies Can Be Used to Reduce Premium Increases?
- Check rebuilding and repair costs: Begin by verifying the Buildings Declared Value (BDV) on your policy document to ensure accurate coverage. Underinsuring the property can lead to progressively wider discrepancies between the insured amount and actual rebuilding costs. Consulting the Building Costs Information Service provided by the Royal Institute of Chartered Surveyors (RICS) can help establish an honest BDV that insurers use to determine premiums.
- Reduce the number of claims: Lowering the risk profile of your block by actively minimising the number of claims can make it more appealing to insurers. Water damage is a common cause of claims in flats, so emphasising regular maintenance checks and preventive measures, such as addressing plumbing issues promptly, can significantly reduce claims related to leaks and overflows.
- Tailor cover and excesses: Work closely with your insurance broker to ensure that your policy aligns with your block’s specific needs, avoiding unnecessary coverage. Adjusting the excess—the amount you pay in the event of a claim—can affect premiums. However, keep in mind that higher excesses may lead to smaller repairs being paid out of the service charge budget instead of through insurance claims.
What is the Future of Insurance Premiums?
Looking ahead, the future of buildings insurance premiums for flats remains uncertain. While it is impossible to predict with absolute certainty, some trends and factors as outlined by experts like Deacon can provide insights into what may lie ahead. Factors such as inflation, changes in building regulations, and the overall economic landscape can impact insurance costs. Additionally, emerging risks, such as climate change-related events, may lead to increased claims and subsequently higher premiums. It is crucial for leaseholders, property managers, and insurers to stay informed about these developments and adapt their strategies accordingly. Proactive measures, such as maintaining a well-managed block, implementing risk reduction initiatives, and regularly reviewing insurance policies, will continue to be essential in managing and potentially mitigating future premium increases. By staying vigilant and responsive to market dynamics, stakeholders can navigate the evolving landscape of buildings insurance premiums and make informed decisions to protect their financial interests.
In Conclusion
Understanding the reasons behind increasing buildings insurance premiums for flats is the first step towards finding viable solutions. While the wider property market experiences similar challenges, leaseholders and block managers can take proactive measures to mitigate the impact. By accurately assessing rebuilding costs, reducing the number of claims through preventive maintenance, and tailoring insurance policies to fit specific needs, it is possible to minimise premium increases. By actively addressing these factors, leaseholders can ensure their financial well-being and maintain control over their building’s insurance costs.