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Protecting Your Home

Define: Buildings Insurance

Buildings insurance covers damage to the actual structure of your home, such as the roof, walls, floors, ceilings and foundations. For example, if your house is destroyed or rendered uninhabitable, you can claim the cost to rebuild or carry out the necessary repairs.

Normally, you will also be able to claim the cost of alternative accommodation while the rebuilding work is undertaken, as well as any legal costs arising from damage to your home. Buildings insurance may also include outbuildings such as sheds or garages.

Importantly, you should always ensure that there is proper insurance in place from the moment you become responsible for the premises, even if this is before moving in.

Typically, buildings insurance covers:

  1. Subsidence of the foundations of your home
  2. Damage by falling objects such as trees, aerials, aircraft parts
  3. Collision damage, e.g. if someone drives into your home
  4. Burst pipes, tanks, damaged boilers and floods
  5. Damage caused during a civil riot

In some cases, you can make smaller claims on your policy for damage caused by less destructive including smoke and broken windows. However, the policy will not cover basic wear and tear and may exclude certain events such as damage caused by terrorism.

These exclusions vary from policy to policy and between the various insurance companies. It is always worth checking the policy details so that you know the risks you are not insured against.

If you have a mortgage, your lender will insist that you have buildings insurance. If you don’t, it is usually advisable to have buildings insurance anyway to protect yourself.

How much buildings insurance do I need?

The level of insurance you arrange should be enough to cover the total rebuilding of the premises. However, the rebuilding cost of a building is not the same as its market value. Depending upon the type of property, the rebuilding cost could be more or less than the property valuation were it for sale.

If you know the rebuilding cost of your home, you should insure it for that amount. You can find out the value from a recent mortgage survey, or by paying a surveyor to carry out a rebuilding estimate survey.

If your property is very valuable or is a listed building, it is certainly worth obtaining a professional valuation first.

Most insurance companies ‘index link’ the level of their cover year on year. This means that the amount of cover offered by the policy will keep up with inflation, although premiums also tend to go up year on year.

It is wise to fully review your policy every two or three years to ensure that the cover remains adequate for your needs.

Do I have to take out buildings insurance with my mortgage lender?

Most lenders make it a requirement of your mortgage advance that you take out a buildings insurance policy to protect your property from damage, and many will offer their own policy at the time you take out the mortgage.

However, there is no guarantee that your mortgage lender will offer the most comprehensive policy, so you should always consider finding an alternative.

Differences between policies include:

  1. Accidental damage. This may simply cover broken door glass or extend to damage to all the fixtures and fittings in your home
  2. The policy excess. This is where you agree to be responsible for the initial part of any claim for damage. The more you agree to be responsible for, the lower your insurance premium is likely to be
  3. The provision of a 24-hour helpline
  4. Discounts on paying an annual premium rather than a monthly one
  5. Discounts for those over 50
  6. Many, but not all, buildings insurance policies are combined with contents insurance

I live in a flat/apartment: Do I need to arrange buildings insurance?

If you own an apartment or flat that is part of a bigger building, you should ensure the owners of the freehold have adequate buildings insurance in place and that this covers your property.

After all, damage to the infrastructure of the building may have an impact on your property or could even destroy it. If you are not satisfied, you can always take out extra cover.

If, on the other hand, you rent a property, it is normally the responsibility of the owners of the freehold or their managing agents to arrange insurance cover.

My property is rented to tenants: do I need buildings insurance?

It is important to insure the premises irrespective of whether you personally are living there. If you do have tenants, you should consult with your insurance company to make sure your policy covers properties that are rented.

My property is currently unoccupied: do I need buildings insurance?

It is still important to insure a property that is lying empty. However, it can sometimes be slightly more difficult to obtain the cover. The premiums may be higher for the period that the building is empty.

Can I change my policy after I have taken it out?

You can elect to change your buildings insurance policy as often as you like, although you should make sure that your property remains properly insured during the change over period from one insurer to another.

What should I think about when choosing a policy?

Compare the cover offered by various policies and see what is most suitable for your needs. Importantly, look for any restrictions within the policy, for instance on flood cover or accidental damage. Also, check for discounts on higher excesses and annual premium payment.

What is contents insurance?

Contents insurance covers the ‘material possessions’ in your home, for example, a stereo or iPod, clothes, curtains, carpets and furniture (put simply, contents insurance covers anything that can be moved while buildings cover insures anything that can’t).

In most policies, the cover extends to areas outside the main property, such as a greenhouse, conservatory or garage. However, more expensive items, usually of £1,000 plus — an expensive computer or jewellery, for example — may have to be insured separately as the majority of policies have limits on payouts.

As a policyholder, you will normally be covered if your possessions are stolen, or damaged, for instance, by fire, flood, burst pipes, boilers or storms.

However, most policies do NOT cover such things as general wear and tear and, unless they offer additional accident cover, spilled paint on a carpet.

The important thing is to understand that every policy is different, to always read the small print for exclusions and to shop around for the best cover and price. If you are unsure about anything, always speak to an experienced and professional broker.

How much contents insurance do I need?

The best way to work this out is to methodically walk around your home with a pen and paper — not forgetting attics and outhouses — and write down all the items in it.

For specific items, such as antiques, it may also be worth taking a photo, which could prove useful in the event of a claim. Once you have done this, simply add it all up and you’ll have a pretty good idea of the cover you will need.

What’s a combined building and contents policy?

Combines policies covers both buildings and contents, and insurers often sell them at a discount in order to make them more attractive. But it can still be cheaper to buy separate policies on the open market.

To learn more about buildings and contents insurance, call one of our consultants on 020 7220 5100 or click here for more contact options.

For insurance business we offer products from a choice of insurers.

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