Insurance is one of the easiest places for managing agents to over-charge through hidden commission. The fix is in three moves: confirm the rebuild value, run the premium ratio check, and demand commission disclosure under the FCA rules. This page walks you through all three.
Premiums for blocks of flats vary wildly. The same building can be insured for £1,200 by one broker and £3,400 by another, with the difference often being undisclosed commission rather than risk. The fair-test is per-£1,000-of-rebuild-value, against published market ranges. Once you know yours, the next steps are obvious.
Per £1,000 of rebuild value per year for a standard residential block. London and high-rise run higher. Listed or non-standard construction can run £6+. Anything above this without good reason is the question.
Of the gross premium, taken by the broker or managing agent. Required to be disclosed under the FCA's Insurance Distribution Directive 2018. If your agent has not volunteered this number, ask in writing.
By a RICS Registered Valuer. A Reinstatement Cost Assessment costs £500 to £2,000 and is itself a service charge expense. Without it, your sum insured is guesswork and underinsurance triggers the average clause.
What good looks like. A current Reinstatement Cost Assessment under three years old. A premium in the £2 to £4 per £1,000 range for standard construction. A written commission disclosure showing what the broker and any intermediary earn. Three quotes obtained from different brokers in the last renewal cycle. Cover specified as "modern reinstatement" (rebuild to current standards), not "indemnity" (depreciated value). All of this evidenced in the year-end accounts.
The lease sets who arranges insurance (freeholder, RMC, or leaseholders), what the policy must cover (structure, common parts, individual flats, alternative accommodation), and whether the proceeds are held on trust. LEASE-iQ extracts the insurance clause so you know exactly what you must arrange and the trust position before you switch broker.
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The most common starting point. You are paying premiums via the service charge but you do not know whether the rate is reasonable, whether the rebuild value is current, or what commission your agent or broker is taking.
An uninsured building is an extinction-level risk. A fire that happens during a lapse can wipe out the company financially and expose directors personally if the lapse was avoidable.
If your premium has risen sharply at renewal without an obvious reason (no claims, no major rebuild value increase, no risk reclassification), the suspicion is justified. If the broker or agent will not disclose commission promptly, that confirms it.
Enter your rebuild value and current premium. The output is a per-£1,000 ratio against published market ranges, with a fair / high / very high flag.
All figures are indicative ranges based on published rates checked April–May 2026. Always compare three written quotes for your specific building. Last reviewed for accuracy on the page legal-check date shown above.
For block insurance you want a BIBA-accredited broker that specialises in residential blocks. For rebuild value you want a RICS Registered Valuer with property insurance experience. Both must be independent of your managing agent.
The buildings insurance policy protects the building. It does not protect directors personally if a leaseholder, member, contractor, or regulator sues them for breach of duty. RTM and RMC directors are personally exposed without separate Directors & Officers (D&O) liability cover, even though they sit behind a limited company.
D&O is a separate annual policy, typically £200–£500 per year for a small block. It is not statutory and not bundled with the buildings policy, which is why it gets missed. It is the single most overlooked cover in self-managed blocks.
A dedicated D&O page is in build. In the meantime, ask your broker for a quote alongside the buildings renewal.
First email goes to your existing broker or managing agent under the FCA IDD rules. Second goes to two new BIBA-accredited brokers for like-for-like quotes.
If the response is evasive or commission is over 25%, that is the answer. Switching is justified. If commission is under 15% and the rate-per-£1,000 is in the fair range, the existing arrangement may be reasonable. The point of the disclosure is to know.
Insurance is treated differently from most other expenditure. Section 20 consultation does not apply, but other reasonableness tests do.
The premium is recovered from leaseholders via the service charge, in line with whatever the lease says. Most leases require it to be a separate insurance line in the demands. The Section 21B summary of rights must accompany the demand.
Most buildings insurance policies run for 12 months. A 12-month policy is not a qualifying long-term agreement under Section 20 LTA 1985, so switching broker or insurer at annual renewal does not require consultation. This makes insurance unusual among service charge items and easier to change year-on-year. A multi-year insurance or broker arrangement over 12 months could trigger Schedule 2 consultation if per-leaseholder cost exceeds £100/year, so check the policy term before assuming.
Leaseholders can apply to the First-tier Tribunal (Property Chamber) for a determination under Section 19 LTA 1985 that any service charge (including insurance) was not reasonably incurred. The remedy is a determination that some or all of the charge is not recoverable. The Leasehold and Freehold Reform Act 2024 has introduced further insurance transparency rights and remedies; the commencement of those specific provisions is being phased by the Government, so check legislation.gov.uk for the current in-force position before citing them. This is the leaseholder-side equivalent of your job as a director: arrange insurance reasonably or face challenge.
Many leases require the landlord (or RTM/RMC) to hold any insurance proceeds in trust for the leaseholders. Check your lease. If your lease so provides and the company spent insurance proceeds for any other purpose, that is a serious breach of trust. Major works funded from insurance proceeds need careful accounting.
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"Building Trust is built by Adam Street, a director of Hafer Road Flats Limited (16-flat SoF in Battersea). Every page reflects what we do at HRFL or wish we had been told sooner. The fee benchmarks calibrate against real building data."
Read the Hafer Road case study →BLOCK-iQ logs your renewal date, holds the policy schedule and the most recent Reinstatement Cost Assessment, and runs the ratio check at every renewal so a 30% jump cannot pass unnoticed. Commission disclosure prompts go out automatically.