Leaseholder Insurance: The Hidden Practices Costing You Thousands
At Cobine Carmelson, we’ve been raising awareness for years about the unfair practices in the property insurance sector—particularly affecting leaseholders, property owners, managing agents, and insurance brokers. While we began writing about this issue in the early 2000s, it’s only in recent years that the conversation has gone mainstream. The truth is out: leaseholders across the UK are waking up to the decades-long exploitation by freeholders, brokers, and managing agents.
The Insurance Trap Facing Leaseholders
Far too often, leaseholders are blocked from obtaining competitive insurance quotes. Why? Because managing agents and freeholders have historically colluded with brokers to keep insurance arrangements opaque. These behind-the-scenes dealings usually include undisclosed commissions or backhanders, with little to no regard for what’s in the best interest of the leaseholders footing the bill.
When Email-Only Communication Goes Wrong
We frequently receive enquiries from people who prefer to communicate exclusively by email—and we’re happy to oblige. However, it’s crucial to understand the risks that come with a solely digital approach. Email lacks the nuance of a phone call or meeting, and small details can easily get lost.
Take a recent case as an example. A leaseholder copied and pasted outdated information into a quote form without understanding how critical some omissions were. Had they proceeded, they might have received a quote that seemed competitive—only to later discover it was invalid due to undeclared claims history and our office being closed at the time.
To avoid such mishaps, we always recommend a brief call or meeting—sometimes even five minutes is enough. We prefer working with individuals who’ve been involved with the property long-term and have institutional knowledge of prior claims or disputes.
The Consequences of Withholding Claims Information
One of the most troubling practices in this sector is the intentional omission of claims history by brokers. Some even go as far as stripping claim details from client records entirely. This might seem like a shortcut to a cheaper quote, but in reality, it creates a false application—putting you in an uninsured position.
In one instance, a client switched brokers thinking they had found a better deal. But when the full claims history was finally disclosed—after the quote had already been issued—the insurer increased the premium dramatically. Why? Because late disclosures signal a red flag to underwriters. Even if the claim doesn’t impact the rate directly, the failure to disclose it can shake an insurer’s confidence.
Worse still, if a claim later arises and the insurer discovers it was not informed of past incidents, they may deny the claim entirely.
Freeholders and Brokers: A Longstanding Alliance
The unfortunate reality is that many freeholders and managing agents have entered into cosy arrangements with specific insurance brokers. These relationships often involve shared commissions or “admin fees,” taken from the leaseholder’s premium without full disclosure. Over time, these unethical partnerships have cost leaseholders millions.
Even when leaseholders try to obtain better rates, they may find that incomplete or misleading claim histories get in the way. Insurers who initially offer competitive quotes may backtrack upon receiving the full story, often penalizing the very people who tried to be honest in the end.
What Can You Do to Protect Yourself?
If you’re a leaseholder or property manager, transparency and diligence are your best defenses. Here’s how to avoid being caught out:
- Keep Your Own Records: Maintain a personal record of all claims—regardless of size or outcome.
- Request Full Claims History: If you’ve changed brokers, you’re still entitled to ask your previous broker for a complete claims history. If they refuse, report them to the regulator.
- Always Disclose Everything: When obtaining quotes, be upfront about all known issues, even if you’re unsure how relevant they are.
- Avoid Brokers Who Rush Quotes: If a broker doesn’t ask questions or request supporting documents, be suspicious.
- File Complaints When Needed: If you discover undisclosed commissions or claims being hidden, raise the issue formally. The industry will only change if enough people speak up.
Final Thoughts
The property insurance industry is overdue for reform—but until that happens, leaseholders must take matters into their own hands. By staying informed, keeping thorough records, and demanding transparency from brokers and managing agents, you can protect yourself from unnecessary costs—and make sure your insurance coverage actually works when you need it most.
Need Help Navigating Leaseholder Insurance?
At Cobine Carmelson, we believe in clarity, honesty, and putting leaseholders first. Contact us today for advice or to request a claims history audit before your next renewal.
