Leaks in flats...who pays?

[Dubya]

I own a flat with share of freehold in a small block of 5 flats. Two of the flats have recently had leaks (washing machine and the other I don't know the cause as he didn't explain what happened). One of the flats is owner occupied and the other has a tenant in it. The owner (also a share of freeholder) of the flat with the tenant in tried to claim on the Buildings Insurance. I can't see how her tenants washing machine leak is anything to do with the other freeholders. Obviously every claim made on BI increases next years premium. I think the issue is between the tenant and her landlord - e.g if the leak was due to lack of maintenance inside the flat, the landlord is on the hook. If it was because the tenant had fiddled with the machine it would be down to them and, presumably their contents insurance if they have it. Does the landlord in this situation need to have her own insurance in place to cover damage by her tenant? Sorry for the long story to what is a pretty straightforward issue.

 

[fisicx]

Yes, the landlord needs insurance. This is separate to the building insurance you pay collectively as co-freeholders and separate to insurance you pay as a leaseholder.

It can get very complicated but should all be defined in the freehold/leasehold documents.

 

[The Byre]

The person who caused the damage has to pay. If your washing machine decides to leak, you pay. If your dog sets fire to a sleeping grandmother, you have to pay for a new grandmother.

If liability or cover can be placed elsewhere, that's all fine and dandy. The maker or seller of the washing machine may have to cover the payment. If the dog is insured against setting for to sleeping grandmothers, the insurance may cover the costs for a new grandmother.

IMO, there is an over-reliance on insurance in Britain and an over-reliance on trying to get someone else to pay for what is our own responsibility.

 

[MBE2017]

IMO, there is an over-reliance on insurance in Britain and an over-reliance on trying to get someone else to pay for what is our own responsibility.

So you don’t have insurance?

 

[The Byre]

So you don’t have insurance?

Only those policies I am obliged by law to carry - employees, customers and cars. That's it. Nothing else!

 

[Frank the Insurance guy]

Yes, the landlord needs insurance. This is separate to the building insurance you pay collectively as co-freeholders and separate to insurance you pay as a leaseholder.

It can get very complicated but should all be defined in the freehold/leasehold documents.

Yes it can be complicated, but doesn't need to be!

Noted that you have a share of the freehold.

In normal circumstances, the Freeholder arranges Buildings Insurance, which is then paid for by the leaseholders. As such all leaseholders will have access to, and cover, under the Buildings Insurance policy. This provides cover for loss and damage to the "building" and communal areas.

Therefore if a ceiling is damaged by a water leak, the Buildings Insurance policy will pay for the cost of repairs/repainting etc.

As the Buildings insurance policy is paid for by the leaseholders, it will usually mean that the insurers cannot pursue the leaseholder for the costs of the damage/repairs (Most policies will indemnify leaseholders that pay towards the insurance premium).

The person who caused the damage has to pay. If your washing machine decides to leak, you pay.

Have to disagree. A claimant would need to prove liability - in this instance, the landlord/freeholder/insurer would need to prove the tenant was liable for the loss or damage - this would usually mean proving they knowingly let it happen or were negligent which caused the damage to occur. In my experience of dealing with this example of a claim I have never seen a case where a tenant has been found liable.

An example - if a tree in your garden is blown down in a storm and damages a neighbours car or home - you would not be held responsible unless you were legally liable (eg. you were aware that it was rotten and dangerous and failed to do something to prevent a likely injury, loss or damage!).

he owner (also a share of freeholder) of the flat with the tenant in tried to claim on the Buildings Insurance.

He is entitled to do that. If you had some damage, how would you feel if the other co-freeholders told you that you could not make a claim on the insurance policy you pay towards?

I can't see how her tenants washing machine leak is anything to do with the other freeholders.

It is the subsequent damage caused by the water that has something to do with the freeholders.

Obviously every claim made on BI increases next years premium.

A claim will be taken into consideration when reviewing the renewal premium - if it is the only claim you have had in a number of years, it is worth shopping around for a better deal - speak to Independent Insurance Broker who can carry out a market quotation exercise to make sure you are getting a good deal.

I think the issue is between the tenant and her landlord - e.g if the leak was due to lack of maintenance inside the flat, the landlord is on the hook. If it was because the tenant had fiddled with the machine it would be down to them and, presumably their contents insurance if they have it

I assume the landlord is the leaseholder with a share of the free-hold?. The landlord will no doubt have to carry out repairs to ceilings etc - and they have the benefit of the Buildings Insurance to do that.

However, any damage to Contents of the flat is down to the tenant/landlord directly and falls outside the scope of the Buildings Insurance.

Landlords' should have their own Contents insurance, Landlords Liability and loss of rent cover - they need to arrange this themselves and has nothing to do with the freehold.

Does the landlord in this situation need to have her own insurance in place to cover damage by her tenant?

No, if its is damage to the "buildings" / Yes if damage to the "Contents"

 

[fisicx]

@Frank the Insurance guy - agree that the building insurance would pay for the repairs to the building but it wouldn't have to pay for the redecoration of the flat or a new kitchen floor. I'm sure the other freeholders would want to know why their insurance was paying for a new kitchen.

And if the leak was a result of negligence or poor maintenance wouldn't the insurer seek to claim back from the landlord who in turn would claim from the tenant?

 

[Dubya]

Yes it can be complicated, but doesn't need to be!

Noted that you have a share of the freehold.

In normal circumstances, the Freeholder arranges Buildings Insurance, which is then paid for by the leaseholders. As such all leaseholders will have access to, and cover, under the Buildings Insurance policy. This provides cover for loss and damage to the "building" and communal areas.

Therefore if a ceiling is damaged by a water leak, the Buildings Insurance policy will pay for the cost of repairs/repainting etc.

As the Buildings insurance policy is paid for by the leaseholders, it will usually mean that the insurers cannot pursue the leaseholder for the costs of the damage/repairs (Most policies will indemnify leaseholders that pay towards the insurance premium).



Have to disagree. A claimant would need to prove liability - in this instance, the landlord/freeholder/insurer would need to prove the tenant was liable for the loss or damage - this would usually mean proving they knowingly let it happen or were negligent which caused the damage to occur. In my experience of dealing with this example of a claim I have never seen a case where a tenant has been found liable.

An example - if a tree in your garden is blown down in a storm and damages a neighbours car or home - you would not be held responsible unless you were legally liable (eg. you were aware that it was rotten and dangerous and failed to do something to prevent a likely injury, loss or damage!).



He is entitled to do that. If you had some damage, how would you feel if the other co-freeholders told you that you could not make a claim on the insurance policy you pay towards?



It is the subsequent damage caused by the water that has something to do with the freeholders.


A claim will be taken into consideration when reviewing the renewal premium - if it is the only claim you have had in a number of years, it is worth shopping around for a better deal - speak to Independent Insurance Broker who can carry out a market quotation exercise to make sure you are getting a good deal.



I assume the landlord is the leaseholder with a share of the free-hold?. The landlord will no doubt have to carry out repairs to ceilings etc - and they have the benefit of the Buildings Insurance to do that.

However, any damage to Contents of the flat is down to the tenant/landlord directly and falls outside the scope of the Buildings Insurance.

Landlords' should have their own Contents insurance, Landlords Liability and loss of rent cover - they need to arrange this themselves and has nothing to do with the freehold.




No, if its is damage to the "buildings" / Yes if damage to the "Contents"

Thanks for the detailed reply Frank. Yes the Landlord is also a share of freeholder. We will never establish liability so it sounds like we have to just suck it up. If the leak damaged items in teh flat below - say, kitchen units, karndean flooring etc, is this also covered by a claim against BI? What about contents? e.g TV, clothes, sofa?

'

Landlords' should have their own Contents insurance, Landlords Liability and loss of rent cover

I very much doubt that many landlords have contents cover for flats that they lease. The contents would (mostly) belong to the tenant and they should have contents insurance?

 

[Frank the Insurance guy]

@Frank the Insurance guy - agree that the building insurance would pay for the repairs to the building but it wouldn't have to pay for the redecoration of the flat or a new kitchen floor. I'm sure the other freeholders would want to know why their insurance was paying for a new kitchen.

And if the leak was a result of negligence or poor maintenance wouldn't the insurer seek to claim back from the landlord who in turn would claim from the tenant?

Insurance repairs will including repainting ceilings etc. For things like floors it depends on what flooring and who paid for it - eg. if its is the original floor that is damaged it is likely this would be covered by the Buildings insurance policy.

As for kitchens - if it is a fitted kitchen, it may or may not be covered by the buildings - it all depends what it says in the lease. If the individual leaseholder is responsible (as is mostly the case, they need to insure this themselves as "fixtures and fittings" under their contents policy.)

Thanks for the detailed reply Frank. Yes the Landlord is also a share of freeholder. We will never establish liability so it sounds like we have to just suck it up. If the leak damaged items in teh flat below - say, kitchen units, karndean flooring etc, is this also covered by a claim against BI? What about contents? e.g TV, clothes, sofa?

See my comment above - Kitchen units are likely to be their responsibility, but check the lease. Karndean flooring suggests that the leaseholder paid for this (ie. was not original flooring) and therefore unlikely to be covered by insurance - you will need to check the lease and the insurance policy.

Damage to TV, clothes, sofa (ie. anything movable) is definitely not insured by the Buildings Insurance policy.

 

[The Byre]

A claimant would need to prove liability - in this instance, the landlord/freeholder/insurer would need to prove the tenant was liable for the loss or damage - this would usually mean proving they knowingly let it happen or were negligent which caused the damage to occur. In my experience of dealing with this example of a claim I have never seen a case where a tenant has been found liable.

I have. It was a dishwasher that leaked as a result of a design flaw. The tenant paid the damages and made the manufacturer liable - who then had to pay.

An example - if a tree in your garden is blown down in a storm and damages a neighbours car or home - you would not be held responsible unless you were legally liable (eg. you were aware that it was rotten and dangerous and failed to do something to prevent a likely injury, loss or damage!).

As the owner of many thousands of trees, I can assure you that storms are always to be reckoned with. Autumn, Winter, Spring - storms happen. They happen every year without fail. And yes, healthy trees of all sizes and ages get blown over. I have to clear trees that have been blown down every year and several times a year.

The legal principle (English law of tort) is the principle of 'The Reasonable Man' - though nowadays, we speak of the reasonable person. It is reasonable to expect that a tree may be blown down. I know this, as I have to clear at least ten blown-down trees every year - the last one being just two weeks ago.

In this case - is it reasonable to expect a washing machine to leak occasionally? As I have witnessed many a leaking washing or dishwashing machine, the answer would have to be yes. You might argue that a decent Bosch or Miele seldom, if ever, leaks. But a cheap and nasty Beko or Kenwood can be seen to leak quite often.

Was there a duty of care?

• Is there a relationship of proximity between the parties? Yes, they were in the flat below.
• Was the injury to the claimant foreseeable? Obviously yes, washing machines do on some occasions leak - as do the hoses and other things attached to them.
• Is it fair, just and reasonable to impose a duty? Yes. A reasonable person would see a leak and shut down the machine and shut off the water and mop up any water that had thus far escaped.

If the owner of the machine is insured, then that is the body that should be paying.

I do realise that in all jurisdictions, insurance companies love to make up their own ways of doing things as this is good for business.

For example, in Germany we have the knock-for-knock principle. Whatever happens, your insurance just takes care of you regardless of who is at fault - on the what-goes-around-comes-around idea. Over the millions of claims made every year, in the end, it matters little who is really at fault in every case. Things average themselves out, so we just pay up every time.

The result is that frivolous or even bogus insurance claims are a national people's sport - thereby putting up insurance costs for everybody, including the prudent, careful and honest. The foolish, the careless and the dishonest - and of course the insurance companies - are the only beneficiaries!

 

[Frank the Insurance guy]

Thanks @The Byre - a wealth of knowledge and experience as always! I knew you would have a story about your trees

My post comes from an Insurance background and not a legal one. Unfortunately it is how this type of incident is dealt with by insurers.

Interesting to see a Knock-for-knock agreement exists in Germany. There used to be a similar arrangement for car Insurance in the UK - if you were involved in an accident involving another car, each insurer would pay their own repair costs regardless of fault (even if cover was third party only, you would get your car repaired!). All that changed when Direct Line started up (about 1990?), when they refused to sign up to the knock for knock agreement, which increased profits and other insurers soon followed! At the time, a lot of young drivers in their XR3's and Golf GTi's would just insure for Third Party only - they new if they hit another car, they would get their own car repaired - the savings between Third party and Comprehensive were huge!

 

[The Byre]

Thanks @The Byre - a wealth of knowledge and experience as always! I knew you would have a story about your trees

Much of my life revolves around trees - we have a lot of them!

Interesting to see a Knock-for-knock agreement exists in Germany. There used to be a similar arrangement for car Insurance in the UK - if you were involved in an accident involving another car, each insurer would pay their own repair costs regardless of fault (even if cover was third party only, you would get your car repaired!). All that changed when Direct Line started up (about 1990?),

They did more or less the same thing in Germany and now the German insurance scene has become even more complicated than before - and is not one I understand really! All I know is that knock-for-knock took quite a knock there so many schemes have knocked it on the head.

But knock-for-knock came knocking when an employee injured himself whilst working on a private personal project and had borrowed some power tools from us and hurt himself. The state health insurance AOK wanted to know the name of our liability insurance and got all shirty when I refused to tell them as what that fool did in his private life was no concern of ours. They then said that they need the name as they had knock-for-knock agreements with all the main companies.

I didn't see the logic in any of that, so I told them to F-off and pay his medical costs.

when they refused to sign up to the knock for knock agreement, which increased profits and other insurers soon followed! At the time, a lot of young drivers in their XR3's and Golf GTi's would just insure for Third Party only - they new if they hit another car, they would get their own car repaired - the savings between Third party and Comprehensive were huge!

That sort of shenanigans lead in Germany to bogus claims to the point where one insurance assessor called fraudulent claims "Volkssport Nummer Eins!" (The Number One People's Sport!)

There have been all sorts of interesting court cases doing the rounds in German courts in the past ten years or so - one day, I'll ask an insurance expert what the state of play is - litigation is another German Volkssport!

 

[Bob Morgan]

There have been numerous 'Leaks' in the Flat above 10 Downing Street! Boris Johnson appears to have paid for those! - Although I wouldn't take it as a precedent!

 

[japancool]

There have been numerous 'Leaks' in the Flat above 10 Downing Street! Boris Johnson appears to have paid for those! - Although I wouldn't take it as a precedent!

What, you mean Plaid Cymru?

 

[Bob Morgan]

What, you mean Plaid Cymru?

Apparently, the Welsh Assembly want to make rules of their own! - Whilst still receiving funding from Westminster!

"Rhaid i'r Saeson Dalu Treth Cyngor Dwbl"

"The English will pay Double Council Tax!"