Insuring blocks of flats against terrorism is becoming increasingly important as the threat level remains severe in the UK – and many lenders now require insurance in place before they will agree a loan for a buyer of a flat or apartment.
“Anybody who is buying an apartment should make sure that terrorism coverage is in place for the block. Most mortgage lenders are going to require terrorism cover now on residential apartment blocks,” Geoff Stilwell, managing director of specialist firm
Beech Underwriting Agencies, told
Insurance Business.
Most blocks in the UK, which are typically commercially owned, will be run by a residents’ committee, board, or property management company, who should be responsible for taking out block-wide property insurance to include terrorism coverage. However, not all will take out coverage, which could leave individual owners at risk.
“If there is an incident and a block of flats is severely damaged or destroyed, the mortgage company is still going to want their money, whether or not you have an apartment left,” Stilwell commented.
“It doesn’t matter if it’s a £1 million house converted into flats, or a £150 million block of apartments – if there isn’t any cover for property damage caused by terrorism in place, and there is serious damage to it, who is going to pay for the repairs?” he went on to say.
While the UK’s official threat level from international terrorism remains severe, Beech Underwriting is still seeing some clients say that they don’t need the coverage – and there are even brokers who do not realise that terrorism coverage is excluded by many property insurance policies.
“Brokers must double check the existing blocks of flats buildings coverage that they offer their clients, and if there isn’t any cover for terrorism, they can come to us for an individual quote,” Stilwell said.
He also stressed that it’s not just metropolitan clients that are recommended to take out the insurance.
“We insure blocks all over the country,” he explained. “Let’s not forget that an attack is likely to be random, and can happen anywhere. We can offer up to £500,000 of cover for around £50 in London, or provincially, say in Southampton for example, for around £30. To me it’s a no brainer.”
Beech Underwriting is also one of the only insurers to include emergency overnight accommodation for people living in residential apartments and houses in its cover, which also includes dedicated coverage for accommodating for cats and dogs.
“Everybody has to realise that they could lose everything in the event of a loss,” Stilwell added. “A house or flat purchase is one of the biggest purchases in most people’s lives – it makes sense to protect it.”
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