# Apartment block uninsurable? - Policy let lapse after a claim by builder/mgmt company



## dstanley (10 Jan 2011)

Hi,

I am the owner of 1 apartment in a building of 4 apartments & 1 commercial unit.

Our building was nearly burnt down by a fire in an adjacent building and suffered 20k worth of damage. This was claimed off of our insurance company, Aviva and the works completed by the original builders, who are also directors of the Management company.

They have since let the policy lapse on the insurance 3 months ago. We appealed to them to re-instate the policy, which they are acting on, but they are having difficulty in doing so.

No other insurer will quote for the property.

What are our options as apartment owners?

Is there an insurer of last resort?


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## Petermack (10 Jan 2011)

Is there a common entrance/hallway/stairwell to the apartment block or has each apartment got its own door entrance. I looked into insuring individual apartments some months ago after a number of apartment owners refused to pay their management fees. We did find a policy from FBD I think it was that allowed this, but only if the apartments had their own entrances that excluded common hallways and stairwells.

Did the fire originate in an adjoining building seperate to the apartments, if so why was the claim against your own insurance ?


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## dstanley (10 Jan 2011)

Each apartment has their own door to a common stairwell.

Yes, it originated in the adjacent building and not the apartments.


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## peteb (10 Jan 2011)

@ Petermack - I'm pretty sure there is some Fire Act in law that states that if another buildings sets yours on fire that you are responsible for your own building only.  I'd have to go dig out the book with it but maybe claimsman or someone can offer more on that

@ dstanley - there is no insurer of last resort as there is no statutory requirement for buildings insurance as there is for motor.


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## redfedora (11 Jan 2011)

wouldnt there now be an issue for the owners mortgages if the bank asked for a letter of imdemnity from the block policy?


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## peteb (11 Jan 2011)

There would be. But that is then up to the bank to arrange cover for their own securities.


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## mf1 (12 Jan 2011)

peteb said:


> There would be. But that is then up to the bank to arrange cover for their own securities.



No. This is not correct. The Banks interest is noted on the block policy and there is an obligation on the mortgagor ( the borrower)  to keep the property insured. It is a breach of the mortgage conditions to let the insurance lapse. 

mf


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## Yorrick (12 Jan 2011)

This is a very serious situation. The Directors seems to be ignorring all Company Acts responsibilities. I would contact the Office of Corporate Enforcement and the Companies Office but first speak to a solicitor


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## redfedora (12 Jan 2011)

yorrick how is not having insirance a breach of the companies acts?


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## Yorrick (12 Jan 2011)

Under the Companies Act the responsibility of a Director is to act in the best interest of the Limited Company, not an individual or a group of shareholders, the Limited Company. If they commit any act or neglect an act  which results in a detrimental impact on the Limited Company they are legally responsible. That is why all good Limited Companies make sure that they have Directors and Officers Insurance in place to protect them from a civil action.


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## redfedora (14 Jan 2011)

Yorrick said:


> If they commit any act or neglect an act which results in a detrimental impact on the Limited Company they are legally responsible..


 

how is not having insurance a breach of this? is there a legal requirement for them to have insurance or is it just expected of them. our head lease states that the company dont have to provide *any* services including block insurance if funding is not availible.  so according to our lease by not having insurance we are not negligant


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## Yorrick (15 Jan 2011)

Redfedora. If you think not having insurance on a building to cover any possible liabilities which may attach to the building due to fire, wall collapse etc go ahead. It makes no difference to me. I'm sure the Courts will have their own view on the matter. Your lease and the civil law are too completely different requirements


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## thetowen (28 Mar 2011)

Petermack said:


> Is there a common entrance/hallway/stairwell to the apartment block or has each apartment got its own door entrance. I looked into insuring individual apartments some months ago after a number of apartment owners refused to pay their management fees. We did find a policy from FBD I think it was that allowed this, but only if the apartments had their own entrances that excluded common hallways and stairwells.
> 
> Did the fire originate in an adjoining building seperate to the apartments, if so why was the claim against your own insurance ?


 
Petermack any chance you could get the name/type of this policy?? I rung FBD today but they couldn't help me.


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