Asking people to check their proposal and cover is a bit of a mantra with us because it’s so important not to fall foul of non-disclosure rules or to forget to meet specific policy requirements.  Claims payouts denied or reduced – and it’s too late to rectify non-disclosure once a disaster has struck and you need to make a claim so you and get everyone’s life back to normal.

Yes, we know that reading an insurance policy and the letters that come with it is no one’s idea of fun, but it is worth your time. Then, if there is anything you don’t understand or are worried about, you can pick up the phone and ask your broker to explain and make any changes that are needed. If the insurer or broker is hard to talk to, hiding behind a Virtual Assistant (aka chatbot) or making it impossible to find a phone number, then you might want to rethink whether these are people you want to be paying hard-earned money to. Can you rely on them to step up to the plate quickly enough in an emergency?

Getting it right first time

You’ll have a head start if you make sure you have a dedicated block of flats policy. As flats are deemed to be commercial premises for insurance purposes, it may be all too easy to think a generic property owners’ policies will do. Additional cover like terrorism insurance where required or emergency assistance, may also need to be tailored so they take into account the difference between a block of flats and a commercial office block. Settling for an off-the-shelf commercial policy could also mean you may miss out on specific requirements such as alternative residential accommodation if the building is uninhabitable, loss of keys, and proportionate cover and premiums for directors’ and officers’ liability for the right to manage company.

By working with a specialist flats insurance broker, you should also be given access to a legal helpline with advisers who understand leasehold, rather than ones who can only offer general business advice and may be out of their depth when asked about common residential leasehold issues.

Given that having read the above you are now looking for a specialist flats policy, the law aims to make it easier to get your policy cover right. The 2015 Insurance Act updated the law by laying down each party’s responsibilities, reducing the likelihood of a claim having to be declined on a technicality. Find out more below. At its heart is your duty of disclosure when taking out a policy.

Keeping it right

It probably goes without saying that you shouldn’t just renew your policy year after year without comparing the market.

Besides, things may change in and around the building and the policy may need reviewing. There may be more, or fewer, sub-let flats, for instance. Or you may have installed new equipment or not got around to undertaking maintenance work and checks that the insurers asked for last year (your broker should have reminded you about that, of course).

It is also possible that you’ve not revisited the building sum assured for many years and relied on index linking. If there’s a big gap between what you’ve declared as the cost of rebuilding and today’s prices, then your policy and premium may be wrong, and the payout for any claim could be reduced in proportion. Do think about getting a revaluation – sometimes insurers can arrange this as a desktop exercise, so getting it done won’t inconvenience you at all.

If you have had high excesses imposed following repeated escape of water claims, it may be possible to renegotiate if precautions you’ve put in place have addressed the issue.

All this comes down to how you “represent the risk” and the Law is clear on fair representation. You have a duty to disclose material facts about the building and the risk as accurately as is reasonable. This duty extends to telling insurers about changes during the term of the insurance policy – don’t just wait until the renewal date.

The result should be that there is no dispute over whether an event is covered should you need to make a claim. We’ve explained more about how disclosure is defined by The Insurance Act 2015 and the duty of fair representation below.

Insurance Act 2015

The duty of disclosure in insurance law puts the onus on the insured parties to provide their insurer with all relevant information before, during, and after their policy is in place. This duty is also known as the duty of fair presentation.

The Insurance Act 2015 is based on the principle of utmost good faith and it is by no means a one-way street: it ensures that insurers act fairly with a regime of proportionate remedies for non-disclosure and misrepresentation. For the insured, this is a positive move away from the previous “all or nothing” approach.

For deliberate or reckless acts, insurers can void the contract, refuse all claims, and retain the premium. For non-deliberate or non-reckless misrepresentations, more proportionate remedies are based on what the insurer would have done had it known the facts, ranging from adjusting the premium to reducing the amount paid on a claim.

What is fair presentation?

Fair Presentation of Risk is now defined as an insured’s duty to disclose every material fact which the insured knows or ought to know, or failing that, to disclose sufficient information that would put a prudent insurer on notice to ask further questions. 

Before this definition, it was thought that disputes and unfairly penalising the insured for non-disclosure or misrepresentation was more likely.

However, if insurers suspect that information might be incomplete or if the presented information raises questions, they may ask for additional details. Here again, working with a specialist broker, who understands leasehold flats, will pay dividends as they are more likely to spot any anomalies and be able to help you to get your insurance proposal right.

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.

FP153-2025