Section 5: Insurance
5.1 A property factor must have, and maintain, an adequate professional indemnity insurance policy, and ensure that it is appropriate for its level of income and type of services offered. This applies to a property factor that is a local authority or housing association unless it is able to arrange equivalent protections through another route. Details of the policy (including name of provider, policy number and summary) or equivalent protections must be made available if requested by a homeowner who wishes to verify the policy is in place.
5.2 Property factors may wish to make homeowners aware of their statutory duty to
insure against prescribed risks, such as fire or flood (see section 18 of the
Tenements (Scotland) Act 2004, and the Tenements (Scotland) Act 2004
(Prescribed Risks) Order 2007 (SSI 2007/16)).
If the agreement with homeowners includes arranging any type of buildings or contents insurance, the following standards will apply:
5.3 A property factor must provide an annual insurance statement to each homeowner (or within 3 months following a change in insurance provider) with clear information demonstrating:
- the basis upon which their share of the insurance premium is calculated;
- the sum insured;
- the premium paid;
- the main elements of insurance cover provided by the policy and any excesses which apply;
- the name of the company providing insurance cover; and
- any other terms of the policy.
This information may be supplied in the form of a summary of cover, but full details must be made available if requested by a homeowner.
5.4 Homeowners must be notified of any substantial change to the cover provided by the policy.
5.5 A property factor must disclose to homeowners, in writing, any commission,
administration fee, rebate or other payment or benefit that is paid to them or anyone in control of the business or anyone connected with the factor or a person in control of the business, in connection with the policy. They should also disclose any financial or other interest that they have with the insurance provider or any intermediary. A property factor must also disclose any other charge they make or apply for arranging such insurance.
5.6 If applicable, a property factor must have a procedure in place for submitting insurance claims on behalf of homeowners and for liaising with the insurer to check that claims are dealt with promptly and correctly. This information must be made available if requested by a homeowner. If homeowners are responsible for submitting claims on their own behalf (for example, for work that is not on common parts), a property factor must take reasonable steps to supply to homeowners all information that they reasonably require in order for homeowners to be able to do so.
5.7 A property factor must take reasonable steps to keep homeowners informed of the progress of their claim or provide them with sufficient information to allow them to pursue the matter themselves if required.
5.8 On request, a property factor must be able to demonstrate how and why they appointed the insurance provider, including an explanation where the factor decided not to obtain multiple quotes.
5.9 If applicable, documentation relating to any tendering or selection process (excluding any commercially sensitive information) must be made available to homeowners on request.
Property Revaluations for Buildings Insurance:
5.10 A property factor must notify homeowners in writing of the frequency with
which property revaluations will be undertaken to establish the building reinstatement valuation for the purposes of buildings insurance. It is good practice for re‑valuations to be undertaken at least every 5 years and sums assured reviewed in other years using the BCIS Rebuilding Cost Index. The property factor must adjust this frequency of property revaluations if instructed to do so, in line with the arrangements in any agreement with homeowners.
Where Public Liability Insurance is Required
5.11 On request, a property factor must provide homeowners with clear details of the costs of public liability insurance, how their share of the cost was calculated, and the terms of the policy and the name of the company providing insurance cover.
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