Trustees and insurance renewals

[Updated 30 April 2025]

In the sectional title environment, short-term insurance plays a critical role. As the name suggests, short-term insurance policies typically cover one year and must be actively renewed at each anniversary. If not renewed, the cover technically expires, which could leave a scheme vulnerable. Most Addsure policies automatically renew as premiums are collected via debit order, and Addsure applies a strict advice process which ensures continuity.

Policies covering buildings and community schemes fall into this short-term category, and trustees need to ensure that their scheme’s insurance is appropriately renewed each year.

A key part of this process involves receiving formal written advice from the appointed financial advisor, intermediary, or insurance broker. This annual advice must meet certain professional criteria, which we explore further in other resources available on this website.

In summary, high-quality written advice should include:

• Basis of the advice: A summary about the information supporting the advice, which will include the prescribed insurance needs, buildings, liability, and fidelity as set out.
• Comparative quotations: A summary comparing different quotations, with full quotes separately attached. In other words, the financial products are considered.
• Clear recommendation: A summarised, understandable recommendation, explaining which insurance product is advised and why.
• The above should be in writing.

Trustees, who have a fiduciary duty to act in the best interest of the scheme, should insist on receiving this minimum standard of advice.

Best practice for handling the insurance renewal

 It is good practice for trustees to address the insurance renewal well in advance, ideally a week or two before the policy expiry date. The discussion should ideally take place at a trustee meeting, where the following documents should be tabled:

• A copy of the letter of advice (LOA) from the insurance broker.
• Copies of all comparative quotes and the renewal invitation from the current insurer.
• A claims history summary for at least the past year (preferably the past three years).
• The most recent property valuation and schedule of replacement values (SRV).

While having the broker present at the meeting is ideal, in practice, this is not always feasible. Therefore, the quality and clarity of the written advice become even more important.

Trustees should also ensure:

• A full property valuation has been conducted within the past three years.
• The current sums insured have been adjusted in line with building cost inflation since the valuation date.
• An updated schedule of replacement values (SRV) is prepared and aligns with the insurance schedule.
• Fidelity cover is checked against the latest audited financials and budget to meet the required formula.
• They understand the claims history as it significantly influences renewal premiums and underwriting terms.

Once reviewed, the trustees should pass a resolution confirming their insurance decisions, sign off the LOA and comparative quotes, and send any further instructions or queries back to the financial advisor without delay.

Looking for a comprehensive resource to assist you in understanding your insurance responsibilities as a trustee?

Click the blue button below to access our Sectional Title Insurance Guide, a must-have tool for all trustees!