Insuring a block of flats: what a block policy covers, and what it costs you if it is wrong
On a single house, a mistake on the insurance affects one home. On a block, it affects every flat at once, and the lender, the tenants and the bank all find out on the same day. Here is how block insurance actually works, from the owner's side of the table.
The short answer. A multi unit freehold block is insured under one buildings policy for the whole building, in the freeholder's name, with the sum insured set at the cost of rebuilding it rather than what it would sell for. The policy should cover the structure and common parts, loss of rent while flats cannot be lived in, and your liability as the owner of shared areas. It only pays out if what you declared about the building, the tenants and any works was accurate. Review it every year, and before every refinance.
Why block insurance is not landlord insurance with more flats
A standard landlord policy is written for one dwelling on its own title. A block has things a single let does not: a shared roof, a shared staircase, a shared boundary, shared services, and a stack of separate tenancies inside one structure. Insurers underwrite that as a different risk, and they call the product a block of flats policy, a property owners' policy or a commercial property policy depending on the size of the building and who is selling it.
The practical consequence is the one stated in the owner's guide to MUFBs: a block is normally one policy covering everyone, so getting the sum insured, the occupancy declarations and the tenancy types right matters more than it does on a house. A mistake does not affect one unit. It affects the whole building, and it usually surfaces at the worst moment, which is the claim.
What a block policy normally covers
Policies differ, so read yours rather than this list, but these are the sections a block owner should expect to see and should ask about if they are missing.
- Buildings. The structure, the roof, the fixed fittings in every flat (kitchens, bathrooms, boilers), and the common parts. Usually against fire, storm, flood, escape of water, subsidence, impact, theft and malicious damage, with accidental damage as an option.
- Loss of rent. If the flats cannot be lived in after insured damage, this pays the rent you lose for a stated period. It is sometimes written as alternative accommodation cover. Your mortgage payments do not stop while the building is being rebuilt, which is why lenders look for it.
- Property owners' liability. Your legal liability if someone is injured, or their property damaged, because of the building or its common parts: a loose stair rail, a slate off the roof, a flooded hallway.
- Employers' liability. If you employ anyone at the block, even a part-time cleaner or caretaker, cover for them is a legal requirement in its own right. Check the current position if you pay anyone directly rather than through a contractor.
- Contents of the common parts. Carpets, light fittings, door entry systems and anything else the freeholder owns in the shared areas. Tenants' own belongings are never yours to insure.
- Optional sections you will be offered: terrorism, legal expenses, and cover for works in progress. Whether each is worth having depends on the building, its location and your plans for it.
The sum insured: rebuild cost, not market value
This is where block policies most often go wrong, and it is the part worth reading twice. The sum insured is the cost of clearing the site and rebuilding the building to its current standard, including professional fees, site clearance and complying with current building regulations. It is not the price the block would fetch, and the two numbers are often nowhere near each other.
| Market value | Rebuild cost |
|---|---|
| What a buyer would pay for the building and the land, driven by the rent roll and the local market. | What it would cost to put the building back as it was, driven by construction, size, access and specification. |
| Can be low in a cheap area even for a large building. | Can be high for the same building, because bricks, labour and scaffolding cost the same everywhere. |
| Can be high in an expensive area for a modest building. | Can be lower than the market value, because the land is worth more than the structure. |
Listed buildings and period conversions are the trap. Rebuilding them to the standard the listing or the conservation officer demands can cost far more than the building sells for, and a policy written on the sale price would leave a large hole. A solicitor who spoke at our deal clinic put it bluntly: ask for the seller's insurance documents early, before you have committed, because the schedule tells you about flood-zone premiums, exclusions and reinstatement cost problems that no survey will.
Two mechanisms matter here. Index-linking moves the sum insured each year with building costs, so the figure does not quietly fall behind. The average clause, present in most property policies, cuts a claim in proportion to any underinsurance: if the building is insured for a fraction of its true rebuild cost, the insurer pays that fraction of the claim, even a small one. A proper rebuild cost assessment from a surveyor, repeated every few years, is the only reliable defence against both.
No figure for the rebuild cost of any block appears on this site, and you should not take one from anywhere else online either. It is specific to the building, its construction and its site, and a surveyor's assessment is the right basis for it.
What you must declare, because the claim depends on it
An insurance policy is a contract based on what you told the insurer. Get any of these wrong, or let them go out of date, and a claim can be reduced or refused.
- Who lives there. Flats let on assured shorthold tenancies are one risk. Students, tenants on benefits, a company let, a short-term holiday let or a room-by-room HMO arrangement are each priced differently, and some insurers will not cover some of them at all. Declare the real tenancy mix and tell the insurer when it changes.
- Any commercial unit. A shop, a takeaway or an office below the flats changes the risk and usually the product. A mixed-use building needs a policy that knows about the commercial part.
- Empty flats. Most policies narrow cover once a unit has been unoccupied beyond a stated period, and set conditions for the meantime: inspections, water turned off, heating kept on. A block with two voids and a refurbishment under way is not the same risk as a full one.
- Works. Renovation, conversion or structural work normally has to be declared before it starts, and larger projects need their own cover. The contractor's insurance does not protect your building.
- Construction. Flat roofs and the proportion of the roof that is flat, timber frame, cladding, non-standard construction, listed status. These are rating factors and they are also the questions a lender's valuer asks, so the answers should agree.
- History. Previous claims, flooding, subsidence, and anything the seller's schedule showed.
Who arranges it and who pays
On a block held as a MUFB, with every flat let on an ordinary tenancy, the answer is simple: you arrange it, you pay it, and it comes out of the rent. There is no service charge to tenants on an assured shorthold tenancy, so the premium is a cost of running the building, budgeted alongside the common parts and the compliance. The freeholder's duties guide sets out the rest of that budget.
Your lender will expect buildings cover for at least the rebuild cost, with its interest noted on the policy, and will want to see the schedule at completion and on each renewal. Agree with your solicitor when cover has to start when you buy a block; it is often earlier than completion day.
What changes when you title split
A title split creates a separate lease for each flat, and each lease says who insures the building. The usual shape is that the freeholder keeps the duty to insure the whole structure and recovers the cost from the leaseholders through a service charge, with each flat's mortgage lender wanting its interest noted. That is a different contract, a different set of declarations and often a different product from the one you held as a MUFB.
The time to sort it is before the split completes, with the solicitor drafting the leases and the broker placing the cover in the same conversation. A flat sold with the wrong insurance arrangement is a flat whose buyer's lender asks awkward questions. The sequence of the split itself is in the title split process, step by step on The Title Split Consultant.
The claims that actually happen, and what reduces them
Escape of water is the common one on blocks: a leak from a flat above runs through two or three below, and the damage multiplies. Knowing where the stopcocks are, telling tenants where they are, and dealing with reported leaks the same day is the cheapest insurance you will ever buy. Fire is rarer and far worse, which is why the fire risk assessment of the common parts is a legal duty rather than a formality; it is covered in the freeholder's duties guide. Liability claims come from common parts in poor condition, so the hallway, the stairs and the external steps are worth walking every month.
Reviewing it every year
Do not let a block policy auto-renew unread. Each year, check the sum insured against the latest rebuild assessment, confirm the tenancy mix and occupancy are still as declared, declare any works planned, and compare the renewal with the market through a broker who places block policies regularly. A block is a specialist risk and a specialist broker usually knows which insurers actually want it.
Common questions
Can each flat in a block have its own buildings insurance?
Not sensibly while the block is on one freehold title. The structure, the roof and the common parts are shared, so the building is insured under one policy in the freeholder's name. Separate policies per flat normally only appear after a title split, when each flat has its own lease, and even then the lease usually puts the duty to insure the building on the freeholder.
Is the rebuild value the same as the market value?
No. The sum insured on a block policy is the cost of clearing the site and rebuilding the whole building, including professional fees, not what it would sell for. The two numbers can be far apart in either direction. A rebuild cost assessment from a surveyor is the right basis, and the figure should be index-linked and reviewed.
Do I need loss of rent cover on a block?
If the building is damaged badly enough that the flats cannot be lived in, the rent stops while the borrowing does not. Loss of rent cover, sometimes written as alternative accommodation cover, is what fills that gap. Whether you need it is a judgement about how long you could carry the block with no income; most lenders expect to see it.
What happens to the insurance if a flat is empty?
Most block policies have conditions about unoccupied units: a limit on how long a flat can be empty before cover narrows, and things you must do in the meantime, such as inspections, turning off water or keeping heating on. Tell the insurer when a flat is empty and read the unoccupancy condition before you assume you are covered.
Does the insurance change when I title split the block?
The building still needs one policy, but who is obliged to arrange it, who pays and whose interests are noted on it changes. The new leases normally oblige the freeholder to insure and recover the cost through a service charge, and each flat's mortgage lender will want its interest noted. Line this up with your solicitor and broker before the split completes, not after.
Related guides
- The freeholder's duties in a block of flats: fire safety, the common parts, and the paperwork a lender asks for.
- Financing a block of flats: how lenders treat a block, and what they want to see on the insurance.
- What is a multi unit freehold block?: the foundations, the two values and the four ways out.
- What to look for in a block before you offer, on The Title Split Consultant, including the paperwork to demand early.
Planning to split the block?
The insurance is one of a dozen things that change on the day a block becomes separate leasehold flats. The Title Split Consultant teaches the whole sequence, from the first look at a building to registered titles, taught by someone who does it on his own blocks.
James Lynch
James has owned buy-to-let property since 2012 and now buys, holds and title splits blocks of flats and mixed-use buildings in the UK: 80 units at August 2026, with 4 more in legals, through companies you can look up at Companies House. He teaches the strategy at The Title Split Consultant.