Building insurance: cover, excesses and blind spots

Most buildings discover what their policy contains on the day of the claim. That is the worst possible moment.

The association must be insured, and buildings almost always are. But between "insured" and "properly covered" the gap can run to tens of thousands — a gap that only appears when a claim is filed.

Re-reading the policy is one of the board’s most profitable annual checks. It needs no technical skill: only five or six precise questions and a note of the answers.

What the building policy covers

The association’s policy in principle covers the common areas and the association’s liability. Depending on the contract it may also cover private areas for certain events, notably water damage and fire — the most important question to ask, because the answer changes how every claim is handled.

• Built common areas: structure, façades, roof, stairs, technical rooms.
• Shared equipment: lift, boiler room, gates, entryphone.
• The association’s liability, particularly for damage caused to a third party.
• Depending on the contract, an extension to private areas for certain losses.
• Possibly legal expenses cover, valuable in a dispute with a contractor.

Excesses: the classic trap

A high excess lowers the premium, which makes the policy look attractive in the budget. In reality it transfers risk to the association: below the excess the insurer pays nothing and the cost is shared by everyone.

The honest calculation compares the premium saving against the number and size of claims actually filed over three years. Many buildings discover the excess costs them more than it saves, because they file two or three small water-damage claims every year.

Exclusions worth knowing

• Lack of maintenance: a defect reported for years and never dealt with is hard to defend.
• Gradual damage, such as slow ingress, often treated differently from a sudden loss.
• Property stored in common rooms, rarely covered.
• Works carried out without approval or by an uninsured contractor.
• Premises left vacant beyond a certain period.

The first exclusion is the costliest, and it ties straight into the board’s follow-up work: a documented, treated defect protects you; the same defect documented and ignored becomes an argument against the association. See keeping an incident log and the annual walk-through.

What the building policy never covers

The association’s insurance does not replace each owner’s. An occupant must insure their home and liability; a landlord must cover their let unit, including between tenants. These policies complement each other and respond according to the origin of the loss.

The board does not police individual policies, but it does a service by restating the distinction: it is the first source of confusion after water damage.

The annual check, in five questions

• Which claims were filed over the last three years, and for how much?
• How much did the association actually receive, net of excesses?
• Has the premium risen, and for what reason given by the insurer?
• Do the sums insured still match rebuilding value?
• Has the policy been re-tendered, and when?

Ask the manager for these before the meeting, alongside the accounts: see the review checklist.

A high excess is not a saving: it is a claim the association pays itself, without realising.

Keep the history with CoproHarmony

CoproHarmony stores the policy, endorsements, claim filings and their photographs, year after year. Create your free space.