Building & Contents 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.
Typically, buildings insurance covers:
- Subsidence of the foundations of your home
- Damage by falling objects such as trees, aerials, aircraft parts
- Collision damage, e.g. if someone drives into your home
- Burst pipes, tanks, damaged boilers and floods
- Damage caused during a civil riot
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.
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.
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:
- Accidental damage. This may simply cover broken door glass or extend to damage to all the fixtures and fittings in your home
- 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
- The provision of a 24-hour helpline
- Discounts on paying an annual premium rather than a monthly one
- Discounts for those over 50
- Many, but not all, buildings insurance policies are combined with contents 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.
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.
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 pay outs.
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.
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.