What is buildings insurance?
Buildings insurance provides you with the money to cover the costs of repairing or rebuilding your home should it be damaged or destroyed.
If you are a landlord or a home owner then buildings insurance is essential, for those renting a property then buildings insurance is the responsibility of your landlord. However, as a tenant, you may wish to consider taking out contents insurance.
Buildings insurance will cover the structure of your home – but can also include sheds, garages and other external features.
A standard policy will usually cover you for the following:
- Lightning damage
- Water damage
It’s important to remember that when you’re taking out buildings insurance – you need to cover your home for its rebuild value, not the market value if you were to sell it. Find out how to calculate how much home insurance you need and compare building insurance.
there are some quick ways to save on your contents insurance before you start to compare buildings and contents insurance:
- Fitting a burglar alarm, joining local Neighbourhood Watch schemes, security lighting and other measures to secure your home
- Fitting a NACOSS alarm could earn you a discount
- Install a smoke alarm
- Increase the excess on your policy – if you are happy to cover more of the cost of the claim your premiums could be lowered
- No claims discounts – the less you claim, the lower your premiums will be.
Do I have to take out buildings and contents insurance?
You are not breaking the law if you don’t have building and contents insurance. However, most mortgage providers will insist that you have buildings insurance before they will lend you any money, as your home is used as collateral in the event that you can’t keep up repayments. And of course you are taking a huge risk, should something happen then the costs of repairs fall on your shoulders.
Circumstances that could render your home insurance policy void
There are a number of other changes to your home situation that could invalidate your contents and buildings insurance policy.
Making significant structural home improvements such as knocking down a wall, installing a loft conversion or putting an extension on the house, this could change the terms of your policy.
You need to inform your insurer if you live within very close proximity to a tall tree or flood-prone area, or have parts of your home made from non-standard materials.
Not informing your insurer will cause problems for you should you need to make a claim later.
What does buildings and contents insurance cover?
The buildings insurance part of the policy offers cover for your home’s structure and its permanent fixtures and fittings.
If you have a mortgage on your property it’s likely that the mortgage provider will insist that you have buildings cover as a condition of the loan, and leaseholder terms may also demand this.
If you own the property outright then the choice of whether to take out buildings insurance is down to you, but you should consider the value of your home, whether you could afford to lose such a valuable asset, and whether you could put another roof over your head.
In obtaining a quote, you’ll be asked the rebuild value of your home.
This should be found on your mortgage agreement or on the deeds of your house, but bear in mind that it’s likely to change over time.
The contents insurance element of the policy offers financial protection against accidents, thefts or loss that can affect your personal possessions and other valuables.
Such cover is optional, but you should consider how important such items are to you and whether you could afford to replace them should they be lost.
In seeking a quote you’ll be asked to assess the value of your contents – it’s important to get this right to make sure you’re not under-insured.
The simplest way to make the assessment could be try our easy-to-use contents calculator.
Alternatively, there’s the laborious task of going through your property room by room, making a list of your possessions and their value.
Insurers usually set a maximum limit for individual items, and this is likely to be in the region of £1,000.
If you have items worth more than this – perhaps jewellery, a bike or expensive electrical equipment – you’ll need to list them separately on your policy.
You should always check your policy’s terms and conditions for full details of what’s covered and for any exclusions.
Are there any advantages to separating buildings and contents insurance?
Ensure that you need both buildings and contents cover before considering a combined policy.
Landlords, for example, may not need contents insurance if they let their property unfurnished or part-furnished.
If you are letting a property, remember that you’ll need a dedicated landlord insurance policy and, even then, you should check your buildings policy carefully to see exactly what’s covered.
Buildings insurance will not usually be of concern to tenants, but it is likely that they’ll want to consider cover for their contents.
It’s possible that you may already have contents cover from a packaged bank account, premium credit card, or some other source.
If so, check that the policy offers sufficient protection, but don’t double up on insurance cover – you’d be wasting money and, in the event of an incident, it can complicate claims and drive up your premiums.
As ever, it’s advisable to search the market for the best deal to suit your needs and to read the terms and conditions before buying a policy.