Key Facts: Home Insurance for Leaseholders

When you think about home insurance, leaseholders and freeholders have different duties and needs for coverage. If you own a leasehold flat or a freehold property, knowing about buildings insurance, contents insurance, and what the law says can help you get the right level of cover. This guide shows the main differences between home insurance for leaseholders and freeholders.

Are there specific considerations to keep in mind when purchasing home insurance as a leaseholder?

When you buy home insurance as a leaseholder, make sure your policy covers risks related to your lease. This includes liability for communal areas and any improvements you have made. Also, check if the freeholder has insurance for the building, as this can impact what coverage you need.

What is the Difference Between a Leaseholder and a Freeholder?

Leaseholder

A leaseholder has a property for a specific time based on a lease agreement. Leasehold properties are often seen in flats. In this case, the freeholder, or landlord, owns the structure of the building and the land it is on. The leaseholder usually takes care of the inside of the property. This includes fixtures, fittings, and personal belongings.

Freeholder

A freeholder owns the property and the land it stands on. Freeholders do not pay ground rent or service charges for the communal areas of the building, unlike leaseholders. Freehold properties usually need buildings insurance. This insurance protects against structural damage and the costs to rebuild.

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Who is Responsible for Buildings Insurance?

Freehold Properties

If you own a freehold property, you must get a buildings insurance policy. This policy covers structural damage to parts of your home, like the walls and roof, as well as permanent fixtures such as a bathroom suite. Your mortgage lender might ask for proof of this insurance to make sure you have enough coverage.

Leasehold Properties

For leasehold properties, the freeholder or managing agent typically arranges buildings insurance. This leasehold buildings insurance protects against structural damage and covers the rebuild cost of your home. The expense is shared with leaseholders as part of the service charge.

Share of the Freehold

If leaseholders own the share of the freehold together, they need to get buildings insurance for the whole building. This means working together among flat owners to make sure there is the right coverage.

What Does Buildings Insurance Cover?

Buildings insurance policies typically cover:

• Structural damage from fire, flood, or leaks
• Permanent fixtures like kitchens and bathrooms
• Damage to shared areas in the building
• The rebuild cost of your home if it is completely destroyed

Leaseholders must pay for buildings insurance if the terms of the lease say so. This is a legal requirement.

What About Contents Insurance?

Do Leaseholders Need Contents Insurance?

Buildings insurance does not cover belongings inside your home. If you are a tenant or leaseholder, you should get a home contents policy. This will help protect your personal possessions like furniture, electronics, and valuable items.

Do Freeholders Need Contents Insurance?

Yes. Freeholders take care of the structure of the building. They should also think about contents cover. This helps protect their belongings from theft, fire, or accidental damage.

How Can Leaseholders Check Their Insurance Coverage?

Reviewing Policy Documents

Leaseholders need to ask for a copy of the insurance policy from the freeholder or the property management company. This document has:

• Name of the insurance provider
• Level of cover
• Exclusions and excess details
• Parts of the building covered

Seeking Professional Advice

If you are confused about your insurance duties, talking to a solicitor or an insurance broker can help you understand your legal right to ask for insurance information.

What Are the Common Exclusions in Buildings Insurance?

Buildings insurance policies can have exclusions. Leaseholders and freeholders need to know about these. Some common exclusions might impact coverage in certain situations.

• Wear and tear from old buildings
• Damage from not keeping up with maintenance
• Leaks from bad plumbing
• Ground sinking that is not covered
• Fixtures and fittings not included in the agreement

What Should You Do If You Disagree with Your Buildings Insurance Costs?

Service Charge Disputes

If leaseholders feel that the costs of buildings insurance are not fair, they can:

• Ask the freeholder for a list of costs.
• Use an insurance calculator to check prices.
• If the charges feel too high, take the issue to a tribunal.

What If You Own a Flat in a Block of Flats?

Buildings Insurance for a Block of Flats

For a block of flats, the freeholder usually takes care of leasehold buildings insurance for the whole building. The cost for this is shared among flat owners and is included in the service charge.

Can Flat Owners Get Individual Buildings Insurance?

Flat owners usually cannot get their own buildings insurance policy. They need to depend on the freeholder’s insurance policy to cover the structure.

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What Do Mortgage Providers Require?

Mortgage providers usually need proof of property insurance before they approve a loan. Freeholders have to show a buildings insurance policy. Leaseholders need to confirm their coverage based on the terms of their lease.

Correct as of 25 February 2025

FAQs About Home Insurance for Leaseholders and Freeholders