Buildings insurance explained How buildings insurance works
When insuring your home, you normally need two policies: one for the building itself and another for its contents.
If you have a mortgage, your lender will insist you take out buildings insurance.
If you're a tenant, it’s down to your landlord to arrange it. In other cases, buildings insurance is not compulsory, but you'd be unwise to do without it.
What buildings insurance covers
Buildings insurance covers the structure of your home (walls, windows, roof etc) as well as permanent fixtures and fittings, such as baths, toilets and fitted kitchens.
It generally covers damage due to fire, lightning, explosion or earthquake, theft or attempted theft, riots or vandalism, storms or flooding, subsidence, falling trees, moving objects (such as a car hitting your home) and escaping or leaking water or oil.
Currently, there’s an agreement between the government and insurers that insurers will continue to offer cover to existing customers living in areas at high risk of flooding so long as the government commits sufficient money towards maintaining and improving flood defences. The agreement has just been extended in advance of a new arrangement, called Flood Re, coming online in 2015.
Damage to your property due to subsidence is usually covered, although there's often a larger excess (the first amount of any claim you have to meet) for this type of claim – normally £1,000 or more. However, buildings policies usually only cover subsidence damage to the house itself.
Patios, garden walls, driveways and swimming pools aren't usually covered, unless your house is damaged at the same time. Storm damage to gates, fences and boundary walls is normally not covered either.
Accidental damage cover on a buildings insurance policy protects against damage you cause to your building or fixtures and fittings.
Standard policies include some limited cover, for example for accidental damage to glass in doors, windows and skylights, and damage to bathroom fittings such as baths and sinks.
Buildings insurance usually also covers:
- Your legal liability as owner of the property, such as liability for damage caused to someone else's property
- Damage to underground cables that supply gas or electricity, or pipes that supply oil, water, or sewage
You can pay extra to extend accidental damage cover to a wider range of problems. Typically this costs between £20 and £100 a year on top of your premium.
You can choose the level of cover you need in one of two ways; sum-insured or bedroom-rated.
With a sum-insured policy, you work out how much cover you need and the insurer calculates your premium on that basis. A bedroom-rated policy does away with the need to calculate exact costs, and instead is based on the number of bedrooms your home has (subject to maximum amounts of cover).
It's not always obvious which type offers the best value, so we suggest you get quotes for both before deciding.
The amount of cover you need is the cost of rebuilding your home, which should include the cost of demolition (if needed), clearing the site, and architects' and builders' fees.
The rebuilding cost is not the same as the market value of your home (how much you would get for it if you sold it). To help calculate the rebuilding cost, the Association of British Insurers has an online calculator.
If your home is not of 'standard construction' (which usually means brick walls with a tile roof), you may need to ask a chartered surveyor to prepare a valuation for insurance purposes. You can find one at the Royal Institution of Chartered Surveyors.