The importance of getting the best deal on insurance
We can all relate to the annual chore of insurance renewal, a letter through the post followed by days of bartering to get the best deal possible.
For many accepting the renewal is the path of least resistance even if a few pounds could be saved by shopping around.
Unfortunately for one landlord not ensuring they received the best deal has resulted in the Upper Tribunal declaring that the premiums were not reasonably incurred under the terms of the service charge.
In Cos Services Limited v Nicholas and Willians  UKUT 372 (LC), the landlord had been insuring the building with an insurance company that was charging a premium of around £12,000 per year for the past three years. The tenants proved that insurance was available on substantially similar terms for between £3,000 and £4,000 per year for those years and they were successful at both the First Tier and the Upper Tribunal in establishing this.
The landlord had not done anything wrong, they had sought a 'block policy' and the Upper Tribunal accepted that this was normally the cheapest way to obtain insurance cover due to economies of scale. Sadly for this landlord, this had not been the case and the premiums they were accepting were some 3-4 times the level they should have been charged.
It should be said that, on the whole, so called 'block' policies are generally cheaper, however, this may not always be the case and landlords are best advised to be certain that they are getting the best deal they can.
Service charge legislation does not require landlord's to always go with the cheapest quote, but landlords may need to be able to demonstrate that it is reasonable to go with a higher quote.