How to handle a Block Insurance renewal properly

Jun 11, 2026 | General

For most freeholders, RTM companies and residents’ management companies, block of flats insurance renewal arrives each year and is dealt with quickly — a quote is accepted, a premium is paid, and everyone moves on. That approach is one of the most common and costly mistakes in residential property management. A renewal handled properly takes time, thought and the right professional support. Here is exactly how to do it.

Block insurance is not like renewing your car or home insurance. The stakes are higher, the policy is more complex, and the legal obligations on those arranging it are considerable. A mistake — whether an underinsured reinstatement value, a coverage gap, or a failure to disclose a material fact — can have consequences that affect every leaseholder in the building. Getting the renewal right is one of the most important things a freeholder or management company director does each year.

Step 1: Start Early — Much Earlier Than You Think

The single biggest mistake made at renewal is starting too late. If you are contacting a broker two weeks before your renewal date and asking for quotes, you are already behind. Handling a block insurance renewal properly requires a minimum of eight to twelve weeks of lead time, and for larger or more complex buildings, longer still.

Here is why the timeline matters. A specialist broker needs time to properly assess your risk, prepare a comprehensive submission, approach multiple insurers, receive and compare terms, and present options to you with a proper explanation of the differences. Insurers themselves need time to underwrite a complex risk correctly — a rushed submission gets a rushed quote, which is unlikely to represent the best available terms.

If your renewal falls in January, you should be starting the process in October. Set a diary reminder twelve weeks out, every year, without exception.

Step 2: Revisit Your Reinstatement Value Every Single Year

Underinsurance is the most serious and most common problem in the block of flats insurance market. It happens when the sum insured on your policy — the declared reinstatement value — is lower than the actual cost of demolishing and rebuilding your block to its current specification.

This distinction is critical: reinstatement value is not market value. A block of flats with a combined market value of £2 million may have a reinstatement value of £3 million or more, because rebuild costs are driven by construction economics — materials, labour, demolition, professional fees, VAT — not by what buyers are willing to pay for finished flats. The two figures can differ enormously, and using market value as a proxy for reinstatement value is a mistake that can prove catastrophic at claim time.

The Average Clause — Why Underinsurance is So Dangerous

Most block of flats policies contain an “average” clause. If your building is insured for less than its true reinstatement cost, your insurer will reduce any claim settlement proportionally. A building insured for £2m with a true reinstatement value of £4m will receive only 50% of any claim — even for a partial loss such as a kitchen fire. This applies to every claim, not just total losses.

Construction costs in the UK have risen significantly in recent years due to materials inflation, labour shortages and supply chain disruption. A reinstatement value set three years ago — even one that was accurate at the time — is very likely to be inadequate today. Annual index-linking within a policy helps, but it is not a substitute for a professional assessment.

According to data from Rebuild Cost Assessment, drawn from 43,000 property assessments, 93% of UK properties are insured for the wrong amount. Of those, 70% are underinsured — not overinsured. This is not a fringe problem; it is the norm.

Our recommendation is to commission a full reinstatement cost assessment from a qualified RICS surveyor every three to four years, and to review the figure carefully at every renewal in between. We have negotiated discounted rates with both Rebuild Cost Assessment and Barrett Corp Harrington for our clients to benefit from, but the cost of a professional assessment is modest compared to the potential shortfall in a major claim.

Day One Uplift

Ask your broker whether your policy includes a “Day One Uplift” clause — typically 25–35% above the declared reinstatement value. This provides a buffer against further cost inflation during the policy year, between the date of a loss and the start of rebuilding works. It is not a substitute for an accurate base figure, but it is an important additional protection.

Step 3: Review What Your Policy Actually Covers

A block insurance renewal is not just a financial transaction — it is an opportunity to review whether your cover remains appropriate for the building as it exists today. Buildings change. Management arrangements change. Occupancy changes. Your policy needs to keep pace.

At each renewal, work through the following with your broker:

Buildings sum insured — Must reflect the current RICS reinstatement value, not market value or last year’s figure rolled forward.

Property Owners’ Liability — A minimum of £5m; £10m is recommended for larger or more complex blocks.

Employers’ Liability — Required by law if any staff are employed, whether a porter, cleaner or caretaker. Most policies provide £10m as standard.

Loss of Rent / Alternative Accommodation — The limit must be sufficient to cover all flats for the realistic reinstatement period. Major works following a serious loss can take two years or more, particularly in complex buildings.

Communal Contents — Covers furniture, carpets and fittings in entrance halls, stairwells, communal rooms and gardens.

Engineering / Lift Inspection — Required under LOLER regulations if the building has a passenger lift. Check whether the statutory inspection is included within your policy or needs to be arranged separately.

Directors’ and Officers’ Liability — Protects RTM and RMC directors personally against claims arising from their management decisions. Often overlooked and increasingly essential.

Legal Expenses — Covers disputes with contractors, leaseholders or third parties. The additional premium is low relative to what legal proceedings can cost.

Terrorism — Excluded by default on commercial property policies. Consider whether the building’s location warrants adding this extension.

Trace and Access — Covers the cost of locating the source of a water leak, including opening up walls and floors to find it.

Pay particular attention to any changes in the building since the last renewal: recent renovations, new communal facilities, changes in flat usage (such as short-term letting via Airbnb), or any fire safety works that have been completed or are ongoing. Your insurer needs to know about all of these.

Step 4: Gather and Disclose the Right Information

Block of flats insurance is underwritten on the basis of the information provided by the policyholder. The principle of utmost good faith applies — you are legally required to disclose all material facts that could influence an insurer’s decision to offer cover or the terms on which they do so. A failure to disclose, even if inadvertent, can give an insurer grounds to void your policy or reduce a claim settlement.

Before approaching the market, gather the following:

  • Full claims history for at least five years, including any claims that were made but not paid
  • Construction details — year of construction, type of construction (traditional brick, timber frame, concrete), roof type and age, and any flat roof areas
  • Number of flats, current occupancy, and the split between owner-occupiers and tenants
  • Any known fire safety issues — cladding type, EWS1 status if applicable, and any outstanding remediation works
  • Any ongoing or planned major works — renovations, loft conversions, structural alterations
  • Security arrangements — access control, CCTV, fire alarm and suppression systems
  • Any unusual features — swimming pools, underground car parks, commercial units or communal plant rooms
  • EV charging points — insurers are increasingly asking about these given the fire risk associated with charging equipment
  • Any storage of e-scooters or e-bikes in communal areas — lithium battery fires are a growing underwriting concern

A note on non-disclosure: Failing to disclose a material fact — cladding type, previous subsidence, a history of escape-of-water claims, or fire safety concerns — can invalidate your policy at the point of claim. Do not assume something is unimportant. If in doubt, disclose it and let the underwriter decide how to treat it.

Step 5: Don’t Just Auto-Renew — Go to Market

Auto-renewal is the enemy of good insurance management. When a block policy is simply renewed year after year with the same insurer on the same terms, several things tend to happen: premiums drift upward without justification, reinstatement values become outdated, and cover gaps develop as the building evolves but the policy does not.

Leaseholders have the legal right to challenge insurance costs they consider unreasonable. The best defence is a renewal process that is demonstrably competitive.

Going to market does not necessarily mean changing insurer — in many cases, your existing insurer will offer competitive terms when they know you are testing the market. But the process of obtaining alternative quotations gives you three things: confidence that your premium is reasonable, leverage to negotiate, and the ability to demonstrate to leaseholders that the insurance has been placed responsibly.

For RTM companies and RMCs specifically, this matters beyond good governance. Leaseholders have the legal right to request a summary of the insurance policy and its cost, and to challenge unreasonable arrangements through the First-tier Tribunal. A renewal process that involves genuine market comparison is your best protection against a challenge of that kind.

As a rule of thumb, a formal retender — approaching multiple specialist insurers via your broker — should happen every two to three years at minimum. In between, your broker should still be benchmarking your renewal terms against the market and advising whether they represent fair value.

Step 6: Understand Your Transparency Obligations to Leaseholders

The regulatory and legislative landscape around block insurance commissions and leaseholder transparency has changed significantly in recent years, and it continues to evolve.

The FCA’s review of multi-occupancy building insurance led to new rules establishing that leaseholders should be treated as customers of the policy — not simply as end-payers of a service charge cost. Insurers and brokers are now required to disclose commission and fee arrangements, and to demonstrate that the product delivers fair value to leaseholders.

The Leasehold and Freehold Reform Act 2024 goes further still, creating powers to introduce “permitted insurance fees” — a framework designed to cap and regulate the amounts that can be charged in relation to arranging insurance. Regulations under this Act are still being developed, but the direction of travel is clear: transparency is no longer optional, and excessive or hidden commissions are under both regulatory and legal scrutiny.

In practical terms, this means:

  • You should be able to provide leaseholders with a clear breakdown of the insurance premium and any associated fees on request
  • Your broker should be disclosing their remuneration openly — if they are reluctant to do so, that is itself a concern
  • If you enter into a long-term insurance agreement (longer than 12 months), Section 20 consultation with leaseholders is likely required — failure to consult can cap each leaseholder’s contribution at £100 per year regardless of actual cost
  • Leaseholders may challenge insurance costs at the First-tier Tribunal if they believe them to be unreasonable

Working with a specialist broker who operates transparently on disclosed fees is the cleanest way to navigate this environment — and increasingly, the approach that leaseholder-led bodies will expect to see.

Step 7: Bind Cover Properly and Confirm Everyone Who Needs to Know

Once you have selected your renewal terms, the final step is ensuring that cover is bound correctly and that all relevant parties are properly noted on the policy.

Check your lease carefully — it will typically specify who must be noted as an insured party. This often includes the freeholder, the management company, and may include leaseholders themselves or their mortgage lenders. Failing to note an interested party correctly can cause complications at claim time and may place you in breach of the lease.

Confirm the following before the renewal date arrives:

  • You have received a policy schedule confirming the effective date, sum insured and all covers in place
  • All parties required by the lease are correctly noted as insured or interested parties
  • Your managing agent (if applicable) has been notified and holds a copy of the policy
  • Leaseholders have been informed of the insurer’s name, a policy summary and how to make a claim
  • Your service charge budget reflects the new premium if it has changed significantly
  • There is a clear process for residents to report damage or a potential claim, and an emergency contact number

There should never be a gap in cover — not even for a single day. If your renewal is delayed for any reason, ask your existing insurer for a short-term extension in writing before the policy expires.

The Block Insurance Renewal Checklist

Use this at every renewal. If any item cannot be ticked with confidence, address it before binding cover.

12 Weeks Before Renewal

  • Renewal date confirmed and diarised — process started at least 8–12 weeks out
  • Reinstatement value reviewed — professionally assessed within the last 3–4 years, or currently indexed correctly
  • Claims history compiled for the last five years, including uninsured losses
  • All material changes to the building since last renewal identified and documented
  • Specialist broker briefed with a full and accurate risk submission

At Renewal Review

  • Cover schedule reviewed against lease requirements — all obligatory covers confirmed
  • Property Owners’ Liability limit confirmed — £5m minimum, £10m recommended
  • Loss of rent / alternative accommodation limit appropriate for realistic reinstatement period
  • Directors’ and Officers’ liability considered for RTM and RMC directors
  • Engineering / lift inspection cover included if applicable
  • Alternative market quotations obtained — not auto-renewing without comparison
  • Broker remuneration disclosed and understood
  • Section 20 obligations checked if a long-term agreement is being considered

Before Binding Cover

  • All lease-required interested parties correctly noted on the policy
  • Policy schedule received in writing confirming all cover details
  • Managing agent notified and provided with a copy of the policy
  • Leaseholders informed of insurer name, policy summary and claims process
  • No gap in cover — extension obtained in writing if renewal is delayed
  • Service charge budget updated to reflect new premium

Why a Specialist Broker Makes the Difference

Block of flats insurance is a specialist class. The differences between policies — in exclusions, conditions, claims handling and insurer quality — are substantial, and they are not visible from a premium comparison alone. A broker who places one or two block policies a year alongside a general commercial book is not the same as a specialist who works in this market every day.

A genuine specialist will know which insurers have the broadest appetite for your building type, which offer the strongest claims service, and where the market is currently moving. They will challenge your reinstatement value rather than simply accepting it. They will identify covers you may not have considered and exclusions you might not have noticed. And when a claim occurs — which in a residential block is always a question of when, not if — they will be in your corner.

At Alastair James Insurance Brokers, blocks of flats insurance is one of our core specialisms. We work with freeholders, RTM companies and residents’ management companies across Gloucestershire and beyond, and we take the time to do renewals properly — from reinstatement reviews and full market submissions to plain-English explanations of exactly what you are buying and why.

If your block insurance renewal is approaching — or if you simply want a second opinion on the cover currently in place — we would be very happy to help.

Call us on 01242 371058 or get in touch via our website