Freeholder Insurance Policy: What Does It Cover?

Freeholder Insurance Policy: What Does It Cover and What Should You Look For?

As a freeholder, you have a legal duty to arrange adequate buildings insurance for any leasehold property you own. A freeholder insurance policy is specifically designed to meet this obligation — it is very different from a standard home insurance product and must reflect the unique responsibilities that come with owning the freehold of a building occupied by leaseholders.

What Does a Freeholder Insurance Policy Cover?

A freeholder buildings insurance policy should cover all of the physical structure of the building, plus the legal liabilities and financial losses associated with being a property owner. Core elements of a well-structured freeholder policy include:

• Buildings and structure: Walls, roof, floors, foundations, staircases, communal corridors, windows, external doors, and fixed service installations (plumbing, electrics, heating systems).
• Property owners' liability: Covers claims from leaseholders, visitors, or members of the public who suffer injury or property damage as a result of a defect in or around the building. This is a legal requirement in most cases and a standard inclusion in freeholder policies.
• Loss of rent: If part of the building becomes uninhabitable following an insured event (fire, flood, storm), this covers the rental income lost while repairs are carried out.
• Alternative accommodation: Pays for temporary accommodation for leaseholders or tenants who are displaced during repairs.
• Employers' liability: If you employ anyone — even a part-time cleaner or caretaker — this cover is legally required in the UK.
• Legal expenses: Covers the cost of pursuing or defending legal disputes related to the property.
• Accidental damage: Available as an optional extension, this covers sudden, unintended damage to the fabric of the building.
• Subsidence and heave: Ground movement cover is included in most policies as standard.

What a Freeholder Policy Does Not Cover

A freeholder buildings policy does not cover the personal contents or possessions of leaseholders — each leaseholder is responsible for their own contents insurance. Equally, if the property is undergoing major works or is unoccupied for an extended period, standard policy terms may not apply and you may need to notify your insurer.

How Is a Freeholder Policy Different From Standard Home Insurance?

Standard home insurance is designed for owner-occupiers and is not appropriate for freeholders of leasehold buildings. The key differences are:

• Freeholder policies include property owners' liability as standard — a critical cover given the freeholder's duty of care to leaseholders and visitors.
• They are structured to cover multi-unit buildings with communal areas, not just a single private dwelling.
• They accommodate the legal relationship between freeholder and leaseholder, including the right for leaseholders to challenge insurance arrangements under Section 19 of the Landlord and Tenant Act 1985.
• They can be extended to cover directors' and officers' liability if the freehold is held by a management company.

What to Look for When Choosing a Freeholder Insurance Policy

When comparing freeholder building insurance options, look beyond the premium and check these key policy features:

• Adequate reinstatement value: The policy limit should reflect the full cost of rebuilding the property from scratch. Underinsurance is one of the most common and costly mistakes freeholders make.
• Property owners' liability limit: A minimum of £2 million is standard, but many insurers offer £5 million or more.
• Leaseholder disclosure compliance: Your insurer should be willing to provide the information leaseholders are legally entitled to request under the Landlord and Tenant Act.
• Claims service: Choose a specialist freeholder insurer with an experienced claims team who understands the complexities of multi-unit buildings and leasehold arrangements.

Get a Fast Quote for Your Freeholder Insurance Policy

Whether you own the freehold of a converted house, a block of flats, or a mixed-use building, we can help you arrange the right freeholder insurance policy. Get a FAST Quote today — our specialists understand the legal obligations of freeholders and will ensure your cover is comprehensive and competitively priced.