Government & Public Sector Buildings – Insurance Challenges (UK)

Introduction

Government and public sector buildings keep essential services running: council offices, libraries, leisure centres, schools, depots, museums, courts, job centres, and NHS-adjacent facilities. They’re also complex to insure. Many sites are older, heavily used by the public, and expected to remain operational even after incidents that would close a typical commercial premises.

For risk managers, estates teams, and finance leads, the challenge isn’t just “buy property insurance”. It’s balancing budget pressure with resilience, compliance, duty of care, and reputational exposure.

This guide breaks down the most common insurance challenges for UK public sector buildings, what underwriters look for, and how to build a programme that stands up when something goes wrong.

Why public sector buildings are different to insure

Public sector property portfolios tend to share a few characteristics that can make cover harder to place or more expensive:

• High footfall and mixed occupancy: Public access, events, community groups, third-party hires, and contractors all increase liability exposure.

• Ageing estates: Older construction methods, legacy wiring, flat roofs, and deferred maintenance can increase frequency and severity of claims.

• Critical services: A closure can disrupt statutory services, healthcare delivery, safeguarding, or emergency response.

• Complex governance: Multiple stakeholders, budget cycles, procurement rules, and audit requirements.

• Non-standard assets: Listed buildings, heritage collections, specialist plant, and unique public infrastructure.

Core insurance covers (and where the pain points are)

Most public sector building programmes include a mix of these covers. The “challenge” is usually in the detail: sums insured, policy wording, exclusions, and how claims are handled.

Property damage (buildings and contents)

Property insurance is the backbone, but public sector buildings often present:

• Underinsurance risk: Reinstatement costs can be underestimated, especially with heritage features, specialist materials, or inflation in labour and materials.

• Complex reinstatement: Planning constraints, listed status, and procurement rules can slow rebuilds and increase costs.

• High-value plant: Boilers, HVAC, lifts, and electrical infrastructure can be expensive to replace and may require specialist contractors.

Common underwriter questions

• When were electrical inspections last completed?

• What’s the roof type and age, and what’s the maintenance plan?

• Are there unoccupied areas, and how are they secured?

• What fire protection is in place (detection, suppression, compartmentation)?

Business interruption (BI) / loss of revenue / additional costs

Public sector doesn’t always fit classic “loss of gross profit” wording. The real exposure is often:

• Increased cost of working: Temporary premises, relocation, security, overtime, IT workarounds.

• Loss of income: Leisure centres, car parks, venue hire, cafés, museums, and events.

• Service continuity: The political and operational pressure to restore services quickly.

Challenge: ensuring the policy recognises the organisation’s reality (costs and service disruption), not just private-sector profit.

Public liability and employers’ liability

High footfall, vulnerable users, and varied activities make liability a major concern.

Typical claim drivers include:

• Slips, trips, and falls in public areas

• Playground and leisure facility incidents

• Events, markets, and community hires

• Contractor-related injuries

• Manual handling and maintenance accidents

Challenge: managing who is responsible when multiple parties use the same premises (council, tenants, contractors, hirers) and ensuring contracts and risk assessments align with the insurance.

Terrorism insurance

Some public sector buildings may be considered higher profile due to location, function, or public visibility.

Challenge: terrorism cover can be overlooked, or assumed to be “included”. It often isn’t, and terms can vary significantly.

Engineering inspection and breakdown

Lifts, pressure systems, boilers, and other plant may require statutory inspections.

Challenge: aligning statutory inspection regimes with insurance requirements, and ensuring maintenance records are robust.

Cyber and data-related exposures

Even though this is a “buildings” topic, modern estates are technology-heavy:

• Access control and CCTV

• Building management systems (BMS)

• Smart meters and IoT sensors

• Public Wi‑Fi

• Integrated fire and security systems

Challenge: a cyber incident can lead to physical disruption (locked doors, disabled alarms, heating failures) and significant additional costs.

The biggest risk areas for public sector buildings

1) Fire risk in older or mixed-use buildings

Older buildings can have:

• Legacy wiring and overloaded circuits

• Hidden voids that allow fire spread

• Limited compartmentation

• Mixed uses (offices + storage + public areas)

Add in contractors, hot works, and public access, and fire becomes a key underwriting focus.

Practical steps that help

• Documented fire risk assessments and action tracking

• Hot works permits and contractor controls

• Clear housekeeping standards (especially in plant rooms and storage)

• Tested detection and alarm systems

2) Water damage and escape of water

Escape of water is one of the most frequent causes of property claims.

Public sector buildings are often vulnerable due to:

• Large pipe runs and multiple risers

• Older plumbing and valves

• Unoccupied wings or seasonal closures

• Complex heating systems

Practical steps that help

• Leak detection in high-risk areas

• Isolation valve mapping and staff training

• Winterisation plans and temperature monitoring

• Regular inspections of voids and risers

3) Storm, flood, and climate resilience

Extreme weather is a growing challenge. Flooding can affect:

• Basements and plant rooms

• Archives and sensitive records

• Electrical switchgear

• Access routes and car parks

Challenge: flood modelling can drive higher excesses, restricted cover, or more scrutiny.

Practical steps that help

• Flood resilience measures (barriers, raised electrics, pumps)

• Drainage maintenance and surface water management

• Business continuity plans that include access disruption

4) Unoccupied and “mothballed” buildings

Public sector estates often include buildings that are:

• Awaiting redevelopment

• Partially closed due to budget constraints

• Temporarily unoccupied during refurb

Challenge: unoccupied property can trigger stricter policy conditions (inspections, security, water isolation) and can lead to declined claims if not followed.

5) Listed buildings, heritage assets, and collections

Museums, civic buildings, libraries, and historic town halls can be difficult to reinstate.

Challenges include:

• Specialist materials and craftsmanship

• Conservation requirements

• Long lead times

• Higher professional fees

If collections are involved, there’s also:

• Fine art and artefacts

• Archival materials

• Environmental control requirements

6) Third-party use, hires, and events

Hiring out halls, sports facilities, and community spaces is common.

Challenge: ensuring the right controls and documentation exist:

• Hire agreements that set responsibilities

• Evidence of hirers’ insurance

• Risk assessments for events

• Capacity management and stewarding

7) Contractor and procurement risk

Public sector work often involves multiple contractors and frameworks.

Challenge: if contracts don’t clearly allocate responsibilities (including insurance), claims can become disputes.

Key points to tighten:

• Minimum contractor insurance requirements

• Indemnities and hold harmless clauses

• Method statements and RAMS

• Hot works and permit systems

Common policy wording pitfalls

Even well-structured programmes can fail at claim stage due to wording mismatches. Common pitfalls include:

• Inadequate sums insured: Reinstatement cost assessments not updated.

• Incorrect occupancy declarations: Buildings used differently than described.

• Unoccupied conditions not met: Missed inspections, water not drained, security not maintained.

• Wear and tear exclusions: Claims driven by maintenance issues may be restricted.

• Flood exclusions or high excesses: Especially for surface water.

• Contract works gaps: Refurb projects not properly declared or covered.

What underwriters want to see (and what improves terms)

You don’t need perfection, but you do need evidence of control.

Underwriters typically respond well to:

• Up-to-date asset register: Construction, occupancy, rebuild costs, protection.

• Planned preventive maintenance (PPM): Documented schedule and completion.

• Compliance records: Electrical inspections, fire alarm tests, lift inspections.

• Claims history with lessons learned: What changed after incidents.

• Risk improvements: Leak detection, roof surveys, compartmentation upgrades.

• Business continuity planning: Realistic plans for service continuity.

Procurement and governance challenges

Public sector insurance is often procured through frameworks or tenders.

Challenges include:

• Balancing price vs. resilience: Cheapest premium can mean higher excesses or narrower cover.

• Multi-year budgeting: Insurance costs can spike after market shifts or major losses.

• Stakeholder alignment: Estates, finance, legal, and service leaders may have different priorities.

A useful approach is to define “non-negotiables” early (e.g., minimum BI cover, terrorism position, flood approach) and then evaluate bids against those.

Claims handling: why it matters more in the public sector

Claims aren’t just financial events. They can become political, operational, and reputational.

Public sector claims often involve:

• Media attention

• Service disruption

• Vulnerable users

• Scrutiny from auditors and regulators

Challenge: ensuring the claims process is fast, documented, and aligned with procurement and governance.

How to reduce risk and strengthen your insurance submission

A strong submission can improve terms and reduce disputes later. Consider including:

• Portfolio summary (number of sites, key locations, total values)

• High-risk site details (flood, heritage, high footfall)

• Protection details (alarms, sprinklers, security)

• Maintenance and inspection evidence

• Unoccupied property controls

• Contractor management approach

• Business continuity overview

When to get specialist advice

Specialist broking and risk advice is most valuable when you have:

• Listed or heritage buildings

• High flood exposure

• Large leisure or public-facing facilities

• Complex refurb programmes

• Significant plant and engineering risks

A broker can help translate operational reality into underwriting language, benchmark limits and excesses, and negotiate wording that matches how the organisation actually functions.

FAQs

Do public sector buildings need different insurance to private commercial buildings?

Often, yes. The core covers are similar, but the risk profile (footfall, service continuity, governance, heritage assets) can require tailored wording, higher limits, and different BI structures.

What’s the biggest cause of property claims in public buildings?

Escape of water and storm-related damage are common. Fire is less frequent but potentially catastrophic and heavily scrutinised by underwriters.

How do we avoid underinsurance?

Use professional reinstatement cost assessments, keep them updated, and ensure the declared values reflect current rebuild costs and any heritage or specialist features.

What about buildings that are temporarily unoccupied?

Tell your insurer/broker and follow any unoccupied property conditions strictly (inspections, security, water isolation). Unoccupied buildings are a common source of claim disputes.

Do we need terrorism cover?

It depends on the building type, location, and risk appetite. Don’t assume it’s automatically included—confirm the position and consider whether the building’s function makes it higher profile.

Conclusion and next steps

Government and public sector buildings are challenging to insure because they’re public-facing, operationally critical, and often complex or ageing. The best outcomes come from aligning insurance cover with real-world use, maintaining strong compliance and maintenance records, and presenting underwriters with clear evidence of risk control.

If you’re reviewing your programme, start with the basics: accurate values, clear occupancy information, and a realistic view of service continuity costs. From there, focus on the high-frequency losses (water, storm) and the high-severity exposures (fire, flood, terrorism) so your cover is built for resilience—not just renewal.