Home insurance Buildings insurance explained
Buildings insurance will cover the main structure of your home
What buildings insurance covers
Buildings insurance 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 (from a tank or pipe, say).
Mortgage requirement
If you have a , your lender will insist you take out buildings insurance - whether the property is your primary residence or an investment. In other cases, buildings insurance is not compulsory.
You can arrange your own cover, and often much more cheaply. However, the lender will want to check the policy is adequate and may charge you a 'switching fee'. Your new insurer might be willing to pay this fee for you.
Calculating cover
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 a surveyor at The Royal Institute of Chartered Surveyors.
Sum-insured and bedroom-rated
There are different ways to select the level of cover you need. With a sum-insured policy, you work out the rebuilding cost of your home (not the market price but the cost of rebuilding the property from scratch) 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 each before deciding.
Insurers will want to know how many rooms were originally designed for sleeping in, even if they are now used for a different purpose. Your insurer may also want to know whether any rooms have been converted into bedrooms.
Accidental damage
Accidental damage cover on a buildings 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 - and any 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 extra.
If you are living in an area prone to flooding it will affect your premium
Flooding
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 providing the government commits sufficient money towards maintaining and improving flood defences. The agreement is due to end in the Summer of 2013 and discussions are taking place to ensure that a viable alternative is in place.
You may find it hard to get cover if you live in an area repeatedly affected by flooding. However, if there are plans to improve flood defences in your area, your existing insurer should continue to offer you insurance.
The Environment Agency and Scottish Environment Protection Agency have maps showing areas of land that may be at risk of flooding from rivers and the sea. The Environment Agency also runs Floodline Warnings Direct, a service that provides free flood warnings by telephone, mobile, fax or pager.
To minimise damage you should do the following where appropriate:
• Replace timber floors with concrete and covering with tiles
• Replace chipboard/MDF kitchen and bathroom units with plastic or aluminium equivalents
• Move boilers and electrical points well above likely flood level
• Install one-way valves into drainage pipes to avoid sewage backing up into the house.
More help and advice
The National Flood Forum is a community-based network set up by people who have experienced flooding. It provides information on all types of flooding and offers free advice on where to buy flood-protection products or get specialist help or advice on insurance.
Subsidence
Subsidence generally happens when the soil - usually clay - on which houses are built shrinks or swells, depending on the weather. The contraction of the clay can cause structural damage to buildings, especially if the amount of movement varies between one part of the building and another.
The problem is exacerbated by the change in our climate, with extremes in the temperature and rainfall we've been experiencing.
How to spot subsidence
If you spot cracks appearing in your house, it's not necessarily subsidence. Your property may be experiencing 'settlement' which occurs when a building settles under its own weight. This is common in new buildings and extensions.
However, if new or expanding cracks appear, doors or windows stick for no particular reason and rippling wallpaper is not caused by damp, there is a chance you may have subsidence.
Reducing the risk of subsidence
• Try not to plant trees too close to your property, as they take a significant amount of water from the soil, causing it to shrink.
• Maintain pipes round your property. Leaking water can wash away soil from foundations.
Effect on house insurance
All insurance companies in our survey provide cover for subsidence, and all specify an excess, typically around £1,000. However, terms and conditions relating to subsidence vary from insurer to insurer, so if you think you may have to claim, check your policy documents carefully.
If you've made a claim for subsidence in the last year and are now looking to switch, many new insurers will decline you. More help and advice The Royal Institute of Chartered Surveyors can provide further practical advice and can recommend a specialist if you suspect your property has subsidence.
Brokers
If you can't get insured, or the quotes you are getting are very high, it could well be worthwhile using a broker.
Brokers will offer advice and then search the market to find the best policy for you, at a good price.
Some brokers operate locally, others are national, and some offer an internet service. To find a broker, contact the British Insurance Brokers' Association.
Flat owners
In England, Wales and Northern Ireland the freeholder is normally responsible for sorting out buildings insurance for flats. This may be done by a management company appointed by the freeholder (or by the flat owners if they collectively own the freehold).
If you own a flat, you usually pay for buildings insurance as part of the service charge. If you do, it's your right to see evidence of the policy and to inspect it.
If you're not happy with your freeholder's choice of insurer, the Housing Act 1996 gives you the right to challenge it via a Leasehold Valuation Tribunal. The Leasehold Advisory Service can provide details and advice on this.
Finding cover yourself
If it's not included then it's up to you to find cover. Premiums are based on the property's rebuilding cost, so a house won't necessarily cost more to insure just because it's been converted into flats.
As with house insurance, policies for flats can be bedroom-rated (where the amount of cover is based on the number of bedrooms) or sum-insured (where cover is based on the cost of your belongings). To find the best deal, your best bet is to get quotes for both.
Owner's responsibility
Insurers prefer to provide buildings cover for the flats in a block under one policy, as it's easier to identify who's responsible for common parts like halls, stairways and the roof.
But sometimes each owner will be responsible for their own buildings insurance if, for example, a building has been converted into two self-contained flats. And in Scotland, your title deeds determine whether you arrange the insurance yourself or collectively with other flat owners.
If you rent your flat out then as the landlord you are responsible for making sure it has adequate buildings insurance.
- Need help choosing insurance? - Call the Which? Money Helpline
- Take a look at our buildings insurance problem solvers
- Worried about the cost of buildings insurance? Take a look at our expert guide
