Q: Due to our recent claims history (four claims in two years totalling £17,510) our insurance premium has increased substantially, and the insurer is imposing an excess a £1,500 Escape of Water Excess with effect from renewal.
The advice we have followed previously was that the management company has to pay the excess, as owners could argue that a policy with a lower/no excess could have been negotiated by the management company.
When the excess was £250.00, it wasn’t really a big issue, but at this level of excess it could potentially be a significant financial burden. Please could you advise?
FPRA Insurance Expert Belinda Thorpe replies:
I would recommend that you have a conversation with residents at the next AGM and recommend that due to the lack of funds available all excesses are paid by the offending party.
It sounds like the claims experience has been pretty poor over the recent years – hopefully this will ensure the owners act a little more vigilantly, check pipework, to try and avoid water damage incidents – potentially agree that the management company still pays the first £250 – for all incidents – and the owner pays the balance which has become required because of the whole block’s experience.
I would recommend getting agreement from all residents in writing as well as discussing adding to minutes.
[Submitted February 2020]