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INSURANCE PLAYS A KEY ROLE IN SERVICE CHARGE DISPUTES
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WHO PAYS WHAT?
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LEASE WORDING & FAIRNESS
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COVER VS EXPECTATION
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DISCLOSURE & DOCUMENTS
Why Service Charge Disputes Often Involve Insurance
In office blocks and multi-let commercial buildings, insurance is usually a major line within the
service charge budget. Leaseholders and occupiers expect insurance costs to be reasonable, clearly
documented and compliant with the terms of their lease.
Disputes arise when there is confusion over what the policy actually covers, how premiums are allocated,
whether commissions or fees are appropriate, and whether cover reflects the building’s risk profile.
Getting the insurance structure right – and being able to explain it – can significantly reduce the
likelihood and severity of service charge disputes.
Key Insurance Considerations in Service Charge Disputes
Practical insurance-related points that frequently come up in landlord / tenant discussions.
- Does the policy match what the lease allows the landlord to insure?
- Are insured values (rebuild costs) up to date and professionally assessed?
- Are communal areas, car parks and shared services clearly included?
- Is loss of rent / service charge cover aligned with lease income and risk?
- Are tenants being asked to contribute to insuring risks that primarily benefit the landlord (e.g. loss of investment value)?
- Is terrorism cover required by lenders, leases or statute, and is the cost clearly explained?
- Are policy fees, commissions and broker remuneration transparent where challenged?
- Is there a clear audit trail – schedules, endorsements and placement rationale – to support discussions?
Common Service Charge Dispute Scenarios Involving Insurance
- Tenants questioning why premiums have increased significantly at renewal.
- Concerns that the building is over-insured or under-insured based on reinstatement value.
- Arguments about whether certain risks (e.g. terrorism, non-damage business interruption) should be included.
- Disputes over apportionment of premiums between tenants in multi-occupancy blocks.
- Challenges about broker commissions, fees or “admin charges” sitting within the insurance line.
- Questions around uninsured losses following a claim – what is covered vs. what is not.
- Allegations that a landlord has failed to arrange “adequate” insurance after a large loss.
- Disagreements over whether improvements or betterments after a claim should be passed through the service charge.
How Insure24 Supports Service Charge Management & Dispute Prevention
- Structuring office block insurance in a way that aligns with typical lease wording.
- Helping landlords and managing agents explain policy scope, limits and assumptions to tenants.
- Providing clear documentation – schedules, endorsements and summaries suitable for service charge packs.
- Reviewing cover after major works, refurbishments or changes in occupancy.
- Guidance on fair and defensible approaches to allocating premiums between units.
- Benchmarking premiums and cover against similar buildings and portfolios.
- Support in the background when service charge queries arise that hinge on insurance detail.
Practical Insurance Steps to Reduce Service Charge Disputes
- Ensure leases clearly explain what will be insured and how costs will be recovered.
- Keep up-to-date reinstatement cost assessments (RCAs) or valuations for the building.
- Document the rationale for key cover decisions – e.g. terrorism, non-damage BI, higher liability limits.
- Provide tenants with summary information, not just a single-page schedule, when significant changes occur.
- Review allocations and apportionment regularly, especially after refurbishments or occupancy changes.
- Work with a broker who understands commercial property, not just generic business insurance.
- Keep a record of insurer risk improvements, surveys and recommendations and how they’ve been addressed.
Who Benefits from Understanding Insurance in Service Charge Disputes?
This guidance is relevant to all parties involved in insuring and managing office blocks and multi-let buildings.
Owners & Management
- Commercial Landlords & Freeholders
- Property Investment Companies & Funds
- Right to Manage (RTM) & Management Companies
- Property & Facilities Management Firms
- Office Block & Business Centre Operators
- Asset Managers & Portfolio Owners
Advisers & Occupiers
- Managing Agents & Service Charge Administrators
- Commercial Tenants & Leaseholders
- Professional Advisers Involved in Disputes
- Surveyors & Valuers
- Law Firms Advising on Landlord & Tenant Matters
- Corporate Occupiers Reviewing Service Charge Budgets
When a major claim hit one of our office blocks, service charge questions followed quickly. Insure24 helped us explain the insurance structure, clarify what was covered and support constructive conversations with our occupiers.
James K., Commercial Property ManagerFREQUENTLY ASKED QUESTIONS
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Why does insurance cause so many service charge disputes?
Insurance is often one of the largest single lines in the budget, and many occupiers don’t see
the underlying detail. When premiums change significantly or cover isn’t well explained, tenants
naturally start to ask questions, which can evolve into disputes if not handled clearly.
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Can better insurance documentation really help prevent disputes?
Yes. Clear, concise summaries and well-organised schedules make it much easier to demonstrate
that cover is appropriate, costs are reasonable and charges align with lease provisions.
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Do we need a separate policy for communal areas and service charge risks?
Not always. Many office block policies can be structured to cover the whole building and communal
areas together, but it is crucial that the insurer understands the layout, lease structure and occupancy.
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Can Insure24 help if we’re already in a service charge dispute?
We can review the current insurance arrangements, identify where cover and documentation could be
improved, and work with you to put a more robust structure in place going forward. We do not provide
legal advice, but can support the insurance aspects of the discussion.
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Can we pay for office block insurance monthly to align with service charge income?
Yes. Monthly premium finance is usually available (subject to status). Many landlords and
managing agents find this particularly helpful where service charge contributions are collected
quarterly or monthly.