Village Hall insurance policies are now invariably arranged with a three-year Long Term Agreement (or Long Term Undertaking). This means that you have committed to remain with that insurer for the three year period.

The advantage of this is that you receive a premium discount in exchange for your loyalty – the discount can range from 5% to 15%, depending upon the insurer. Indeed, some insurers allow a five-year term which carries an even greater discount.

Insurers offer these agreements in order to benefit from the guarantee of your business. Their part of the bargain is that they are not allowed to increase the premium rate for the duration of the agreement. In other words, if their rate for buildings insurance is 20p per £100 of sum insured, that rate of 20p cannot be increased.

The premium itself can go up because the sum insured is likely to be index-linked, but the premium will only rise in proportion to the index-linking. If you decide that you do not want your sums insured to increase in line with the index, then the premium should remain exactly the same year on year. This is not a course we would recommend because your building or contents could become under-insured, which would affect the settlement figure in the event of a claim.

Whilst we are on the subject of claims, if you were to suffer a loss and the No Claims Discount under the policy were to be reduced, you would be released from the agreement and could seek insurance quotes elsewhere. However, for the duration of the Long Term Agreement you are not permitted to replace the insurance with another provider and, indeed, it is unethical for other insurers to offer a quotation during the period of the agreement. They are obliged to withdraw their quote on discovery.

Should your existing insurance provider agree to you cancelling the agreement, they would require you to repay the discount that you have been given. On a premium of £1,000, this could mean repaying discounts totalling more than £350.00 over two years of cover.

As far as hall committees are concerned, Long Term Agreements are win/win! You receive a discount against your premium and insurers are not allowed to increase the premium rate until the three or five years have expired, meaning you have consistency of cost.

If you have any specific queries regarding insurance, you can address them to Martyn Ingram at Norris & Fisher – martyn.ingram@norrisandfisher.com

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