When a leak from someone's flat causes damage to other flats, whether by pure accident or because of a leaseholder's neglect of their duty to keep the flat and its plumbing in good order, tempers are likely to flare if there is any delay in repairs and establishing who is liable to pay for the damage. After all, it is often the innocent party's downstairs who get most of the inconvenience: they want it fixed quickly.
"Who pays?" is a topic that often comes up time in leaseholder forums as some people may assume that the buildings insurance policy will pay for repairs and redecoration following any leak. However, it is worth remembering that the buildings insurance policy is there to protect the interests of the landlord/freeholder, ensuring that they can in turn fulfil their obligation to keep leaseholders' homes habitable.
Comprehensive insurance that includes damage between flats will usually cover incidents that are deemed to be genuine accidents, but not those arising from a leaseholder's negligence such as leaving a bath running. They may not have even noticed a leak if it is a slow drip but that too is negligence because there is usually a clause in the lease that requires due diligence on maintenance. It is important that individuals understand what their specific lease says about their maintenance and repairing obligations.
Repeated incidences of genuine accidents are likely to lead to insurers imposing larger excesses for escape of water or, eventually, even refusing cover for it at all. If you find yourself in this position, a good broker can help you find the right balance between premium and excess. Do give us a call and one of our team will negotiate for you.
Not all leaks go straight down! If builders need to take up floors and wall panels to trace the source then, while insurance will cover the repair if the leak it may not pay for repairing the decorative damage done in tracing its source. Do be sure your block policy cover includes trace and access costs, as do all of ours.
When buildings insurance cannot help
Where an insurance claim is not appropriate, probably because the costs of repairs are lower than the insurance excess or the incident is caused by negligence and is not covered, then hopefully common sense and goodwill will prevail.
The lease agreement may help if there is disagreement as it may say who is liable for repairs and making good. Typically, leaseholders are responsible for plumbing repairs to pipes serving only their own flat. Landlords or managing companies usually cover leaks but arising in communal areas, from shared plumbing or structural issues.
If negotiating between neighbours does not resolve the problem, they could consider mediation as a to try and resolve the matters. As a last resort may have no option but to commence a claim in the Small Claims Court for damages. Small claims are quick, easy, and inexpensive to make yourself online, but most leases do not create contractual relationships between the leaseholders, so taking legal advice first is advised.
If a claim has been made on the freeholder's (landlord's) buildings insurance, then it might seem reasonable for the owner of the flat that caused the leak to be asked to pay the insurance excess. However, the lease may not allow this, and insurers may already have agreed that the incident was a genuine accident. Is it then fair to penalise the individual? What you do really has to be a block-by-block decision, but you might be challenged when you circulate you next service charge budget if there is not general agreement.
Contents cover
All leaseholders should have their own contents cover, which should cover them for damaged belongings and redecoration, but not actually fixing the leak.
If someone wants to claim against the owner of another flat that caused damage to theirs, they will usually go via their own insurer. The two insurers can sort it out between them. The usual advice about not hiring contractors or spending money before the insurer has authorised the expenditure applies.
Top priority – stop the leak!
The leaseholder in a flat with a leak is responsible for taking the all-important initial steps to try and stop a leak as soon as they become aware of the situation. This can often completely avoid damage to the property.
The first step is to turn off the water either by switching off an isolation valve to a faulty appliance or fixture (if one is fitted) or turning off the supply to the whole flat at the internal stopcock.
Ideally everyone will know exactly where their internal stopcock is and have tested it to make sure it isn't seized up. If not, it may be necessary to turn off the supply to the whole building at the external stopcock until a plumber arrives.
If there is a persistent leak into another flat and the occupant of the source flat is not arranging repairs, then it is important that the management company/agents or freeholder gets involved as soon as possible. They will often have the power under the lease to seek access to a flat to determine the source of a problem and to require the leaseholder to fix it.
Some people religiously turn off the water supply whenever they go away, and the building managers may want to encourage this. Either way, it can be useful for someone to have a list of emergency numbers and keyholders in case of emergency.
Remember: If a flat is left unoccupied for an extended period – your policy will tell you how long this is for your building – insurers should be told and they will probably ask that the water supply is turned off. Our blocks of flats team at Gallagher are always on hand to advise.
Disclaimer:
The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.
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