When repair costs are for sharing, what's to be done about slow payers? Common insurance is the answer, says Stewart McIntosh
AS winter bites in early, thousands of Glasgow's homes will suffer unnecessary structural damage because of long delays before repairs are carried out. High winds, snow, and frost have all taken their toll this month. But while most households can quickly claim on buildings insurance, repairs to tenements often take many months because some owner-occupiers do not have adequate cover.
Buildings insurance is only compulsory for mortgage borrowers. Once the mortgage has been paid it is not compulsory - and uninsured owner-occupiers can be uncommonly slow to find their share of common repairs.
When a major repair is required feelings can run high as some affected occupiers demand quick action and others beg for postponement until they can find their part of the bill. And even where this process is fairly amicable, the time taken for everyone to contact their insurer, meet with the loss adjuster, and receive their cheques, causes long-term damage to buildings.
Much of this could be alleviated if tenement occupiers took out a common-repair insurance, according to a leading Glasgow tenement factor. And many people would find the cost substantially lower than their current buildings insurance.
``Common insurance cover for tenements can cost as little as half the price of an individual policy,'' says Alan English of Speirs Gumley, a specialist in residential property management. ``Lack of such insurance is one of the most serious problems facing owners of tenement flats. Without a common policy those owners who no longer have a mortgage, or who have bought their flats by other means, may have inadequate cover - or none at all.''
If there are eight homes in the close, individual householders will find that their own insurance cover will pay only for their eighth of the repair cost. If someone in the close can't or won't pay, delay is inevitable. Sometimes frustrated householders rally round and offer to pay the share of an elderly or under-insured resident, but it has to come out of their own pocket - not from their insurer.
Last winter's big freeze created millions of pounds worth of damage throughout the city. But the misery was protracted in tenement buildings where some households did not come up with their share of the repairs. Often, these were not the households most directly affected by the damage.
Winds of up to 100mph that swept through Scotland earlier this month caused damage which will cost many millions to repair, say the insurers. The snow and frost of the last two weeks have also taken their toll.
``After the gale our repairs desk was inundated with calls for help, many from people with damaged roofs or fallen chimneys,'' says Alan English.
Damage from snow and frost is more insidious and can take longer to make itself felt, but he has no doubt that many households will soon find problems. Then the agony really begins, as tenement dwellers try to get their act together and raise every household's share of the bill before repairs can begin.
``We do have a lot of trouble in getting money in,'' says English. ``Sadly, in almost every tenement building there is someone who can't or won't pay their share of repairs. Trying to get in that money takes up the biggest part of our time and often leads to disputes and delay. Meanwhile, someone has to thole the problem of water penetration or other discomfort.''
Most tenement-buyers automatically buy their buildings insurance from their lender, but English argues that this can be expensive and inefficient. Dealing with a single insurer and loss adjuster means the work can be organised more rapidly, reducing the risks of further damage, disputes and delays.
Many buyers believe they must purchase buildings insurance from their mortgage lender. ``Not so,'' says English. ``If there is adequate buildings insurance, lenders can't insist that they or their nominated insurers provide cover.''
So why don't canny Scots tenement-dwellers band together to buy the cheaper common policy? ``I suspect there is a fear of the perceived authority of their lender. There seems to be something in the Scottish character that makes people reluctant to upset their doctor, their banker - and their building society manager,'' says English.
Common insurance also has the advantage that there is only one excess, which means that a greater proportion of the cost of repair will be paid by the insurer.
Insurance arrangements for tenements are something of anachronism. Most modern flatted developments have mandatory common comprehensive insurance policies, but the titles for most older tenements contain no such provision.
``Representations have been made to the Scottish Law Commission promoting the idea of statutory provision for common insurance, but in the short term legislation is unlikely,'' says English.
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