For many of our customers our Core Factoring Services include for the placing of common insurance policies. In an effort to secure the most competitive terms of insurance for our customers, we appoint AON insurance broker to place the common insurance cover over the properties in our management portfolio.
If you have any doubts as to whether you have insurance cover through HPMS, or about the identity of the insurer covering your property or if you would like further details of the cover, please contact our office and we will be pleased to provide you with the relevant information.
Common Insurance can be a confusing and complex matter. We have therefore produced this informative Q&A which we hope will serve as a useful guide in helping unravel some of the issues.
How does H&PMS procure common insurance for a property?
We do so by initially placing instructions with our insurance broker to research the market and provide their recommendation on insurance cover. We then place the policy through them, for one year, as appropriate with a reputable insurance company on competitive terms, with extensive cover.
How often should the sum insured be reviewed?
Valuations can be arranged by H&PMS on behalf of the homeowners upon request and it is recommended that valuations relative to buildings insurance are undertaken approximately every 5 years. Should the homeowners wish we can obtain costs to have valuations carried out.
How does a homeowner know the insured sum is adequate?
The only method by which to be assured of a true insured sum is to have an insurance reinstatement valuation carried out by a suitably qualified valuation surveyor.
How is the premium calculated?
Insurance premiums are calculated using a rate per £100 insured. So if the property is insured for £1,000,000 and the rate is £0.18 per £100 insured simply apply 0.18% to the £1,000,000 resulting in a premium of £1,800.00. In addition to the premium all insurance attracts Insurance Premium Tax (IPT) of 12% and this will be included in the figures appearing on homeowners common charges invoices.
How is the annual insurance premium billed?
In order to assist our clients in budgeting and payment we spread the annual cost of the buildings insurance premium over 4 equal instalments through our May, August, November and February common charges invoices. Other insurances attracting smaller premiums appear as a one-off charge in the homeowners invoice against the due date.
How is a claim made?
Where possible H&PMS looks to assist with the claims administration process and more specific details of how a homeowner can intimate a common or private claim can be found here.
What is a policy excess and why is this necessary?
A policy excess is a contribution the claimant is required to pay towards a claim and the amount of excess therefore defines the minimum claim value on the policy.
What is index linking?
Many insurers help make sure that the sum insured is kept up to date with any changes in rebuilding costs by ‘index linking’ the policy. This simply means that a sum insured is amended automatically at renewal to reflect any change in the rebuilding cost index. Index linking alone does not ensure that the sum insured is adequate – see points 2 & 3 above.
If a homeowner already has a buildings insurance policy in place that they arranged directly when they purchased their property, in addition to a common policy, how is this resolved?
It is standard practice where dual insurance is identified and where no claims have occurred, for both insurers to agree a 50% refund of premiums paid. In such circumstances we will offer advice which will be dependent on the specific circumstances involved.
What does a homeowner pay H&PMS for with regards to their insurance?
In our role as Property Factor and with specific reference to our Terms of Service and Delivery Standards, H&PMS offer to place “… insurance cover through HPMS Broker, where appropriate, for buildings, property owners liability, lifts, employers liability etc.” Our main Core Factoring Service in relation to common insurance on behalf of our homeowner customers is that of “placing insurance cover” and the administrative cost of this is included in your management fee.
Does H&PMS get a commission or fee from a common insurance policy?
As is commonplace in the industry, the broker receives commission from the insurer and is responsible for handling most of the administration of the policy. The broker in turn looks to H&PMS to carry out the majority of this administration for which we receive commission.
The administration that we undertake in this role includes:-
- Issuing policy documentation
- Claims administration assistance (not Claims Handling which the insurer or broker deals with)
- Dealing with necessary policy endorsation
- Corresponding with interested parties where necessary, such as solicitors, banks, lenders and homeowners
- Arranging for the collection of the premium on behalf of the insurance company
All of the above is in addition to our formal commitment to the broker that the entire annual premium due by the various homeowner groups will be paid to them on time.