Insurance

When the RTM takes over responsibility for a building, this will typically end the current insurance policies as the Freeholder will no longer be the Policyholder.

The Broker: The RTM will need to appoint an Insurance Broker to deal with the placement. The MA may propose a broker, but the RTM should ensure that the recommendation by the MA is bias-free. As shown earlier, some MAs have arrangements in place whereby they benefit financially from successfully recommending a broker. The RTM may be asked to sign a Letter of Authority (LOA) entitling the broker to approach insurance markets on its behalf.

There are a number of policies that may need to be considered.

1. Buildings Insurance: As this policy will have been placed as a Commercial Policy, the insurer may not be willing to refund premium for the unexpired period of insurance. This will have been set out in the policy documents and can result in increased costs for the RTM as the RTM will have to insure for the period from when they take responsibility. As an experienced broker, we would expect to be able to navigate around this issue, seeking to secure an appropriate premium refund for the unexpired period.


2. Directors & Officers insurance: this policy is to protect the directors. It is not expensive but is important to protect the RTM Board members.


3. Engineering: typically, the majority of this cost is for a survey, with a lesser amount on the insurance. The insurer arranges the entire service.


4. Terrorism: this will tend not to be included in the Buildings policy but needs to be put in place to protect against this risk.