Water from Flat A leaks into Flat B causing damage in Flat B. Things to consider:

  • Check the terms of the lease as to who is responsible for the repair and any damage caused.
  • Generally, an individual leaseholder will be responsible for any installation exclusively serving their unit even if it is not within the area of the flat. Any installation serving more than one unit will generally be the responsibility of the landlord or the management company.
  • Check the block building insurance policy. The building insurance will cover finding and accessing the source of any leak referred to as ‘escape of water’ through what is known as ‘trace and access’. Check what the policy excess is for escape of water.
  • The building insurance will also cover the damage caused in Flat A and Flat B but will most likely not cover repair of the cause of the leak e.g. repairing faulty plumbing under a bath or the contents e.g. carpets.
  • If any contents have been damaged, check any contents insurance policy to see what is covered and what the policy excess is.
  • If the leaseholder of the flat above has been negligent or failed to take appropriate action following the leak you may be able to pursue a claim against them for your uninsured losses. The leaseholder of Flat B would need to prove (on the balance of probability) that the leaseholder for Flat A has been negligent or failed to take appropriate action following the leak and this is difficult to do and may warrant obtaining specialist advice.
  • The leaseholder for Flat A cannot pursue a claim from the leaseholder of Flat B through the building insurance policy for two reasons:
    o Flat A benefits from the same policy, so they will be trying to recover from themselves.
    o Most building insurance policies have what is known as a ‘tenant subrogation waiver.’ This means that insurers automatically forfeit their right to pursue a recovery from a tenant or leaseholder of the building they insure (even if they have been negligent).
  • Any building insurance policy excess is deducted from the settlement of the insurance claim and it is common practice for the leaseholder of the unit from which there was an escape of water to cover the shortfall in the settlement i.e. the excess. The leases may cover the topic of insurance policy excess.
  • Any of the affected leaseholders can initiate a claim against the building insurance policy.
  • Finally, try to resolve the matter amicably ideally without an insurance claim (=excess + increased premiums in the future) and perhaps through mediation.

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