Whether you’re buying a new home or have owned one for a while, you may well have encountered the term “buildings insurance”. You may have come across it as a tenant as well – during those long hours on your laptop trying to work out what insurance, if any, you ought to get.

Like any term that includes the word insurance, buildings insurance instantly sounds like a lengthy process, a process involving complex terminology, perhaps a long sales spiel and, most definitely, parting ways with a lot of money. However, like so much insurance terminology, buildings insurance isn’t something that you should be afraid of. In fact, it’s relatively simple.

In this article, we break down everything you need to know about buildings insurance – and the good news is that you might not need to worry about buildings insurance at all!

So, What Is Buildings Insurance?

In all honesty, the clue is in the name. Buildings insurance, as the name suggests is, well… insurance for your building. Buildings insurance is an insurance policy that covers the cost of repairs to the physical structure or fittings of a property in the event of damage. This is insurance covering parts of the building such as the roof, floors and walls, as well as any fitted or permanent fixtures (like your kitchen) against damage from the likes of flooding, storm damage, arson and vandalism.

If you are in the market for buildings insurance, it’s likely that you have also stumbled across the terms Contents Insurance and Home Insurance. It can seem like a murky and complex soup of terminology, but it’s really not once you get your head around it. However, it’s important that you understand what it is that you’re buying, so let’s quickly get contents and home insurance out of the way.

Contents Insurance: contents insurance is exactly what it says on the tin. It’s insurance that pays for damage or loss of an individual’s personal possessions while they are located within that individual’s home – insurance for everything that would fall out of your house if you tipped it upside down and started shaking it.

Home Insurance: home insurance is a combination of building and contents insurance that looks after both the interior and exterior of the property in one convenient, all-encompassing package. Most buildings insurance in the UK is sold as home insurance. However, there are plenty of cases where people instead opt for separate buildings and contents policies.

Who Needs Buildings Insurance?

If you’re a tenant or a renter, you do not need buildings insurance or home insurance. The owner of the property is responsible for the preservation of the building, its fixtures and exterior – and for organising and purchasing relevant insurance. But renters can still benefit from contents insurance, so, if this is you, why not stop reading now and hop over to the buzzvault Guide to Contents Insurance.

If you’re buying a property, either as an owner-occupier or a landlord, then you’re going to need buildings insurance in some shape or form. You may want to get your buildings insurance as part of a broader home insurance policy (including contents cover); you might want to get buildings insurance and contents insurance separately. Also, there are cases where you’ll only buildings insurance. Let’s take a closer look:

Homebuyers

Most home buyers buy with a mortgage – and, in this case, buildings insurance is almost certainly a stipulation of the mortgage provider. This makes total sense, if you think about it: the bank or building society is happy to lend to you because they can recoup the value of their loan on your property, should you be unable to pay. However, if the property is destroyed by a tornado, this becomes more difficult – hence insurance to protect against this happening.

Even if you’re a cash buyer with no lender insisting on it, you absolutely should get buildings or home insurance. You wouldn’t leave £10000 in cash on your kitchen table in the hope that no-one steals it. So why would you leave something more valuable still – your house – unprotected in the hope that you don’t get hit by fire or flooding? Home insurance is a perfectly affordable solution and means you’re not running the daily, nightly risk of your lifetime’s biggest investment going up in smoke.

Buildings insurance is a no-brainer for anyone owning property. But if you’ll be living in the property, the chances are you’ll have your own furniture, your own white goods and plenty of other worldly possessions as well. If your house burns down, what you want from your insurer is not just money to rebuild it, it’s money to replace all the things you had inside it. For this reason, homebuyers should have some form of contents insurance alongside their buildings insurance. These can be bought separately or bundled together as home insurance – we look at some of the pros and cons later on in this article.

Landlords

If you’re buying a property to let out, then the integrity and maintenance of that property is your responsibility – not your tenants. For this reason, just as with owner-occupiers, buildings insurance is a must. However, there are some differences.

If the property is unfurnished, then you may only need buildings insurance. If the things inside the flat are exclusively the property of the tenant, then you don’t need to take out contents insurance (or home insurance) to protect them.

But furnished lets are common as well. Indeed, some rental properties are stuffed full of landlords’ possessions – not just furniture and white goods but electronics, ornaments and even antiques. In these cases you should think about getting contents cover for your property. Standard contents policies are unlikely to cover your things if someone other than you lives in the property, so look out for “landlord insurance” – insurance specifically designed to do just this.

Landlord insurance is a good backstop in the event that a tenant damages your things. But when you claim, you have to pay an excess (check out our Insurance Jargon Buster) and then, typically, your premiums go up. This is not an ideal outcome for something that wasn’t your fault to begin with.

Obviously, you can pursue a liable tenant for damages – but, again, this could be a drawn-out, acrimonious process. A common way around this is to stipulate in your tenancy agreement that tenants need to have tenants liability insurance. This way, their insurer will foot the bill for any damages they cause – saving you a lot of cost and hassle.

How Buildings Insurance Actually Works

What Buildings Insurance Protects You Against

When choosing what buildings insurance policy you want, you need to take some time to understand what you’re protecting yourself against. Buildings Insurance covers the full costs of rebuilding your house alongside loss or damage caused by the likes of:

  • fire
  • storms
  • flooding
  • earthquakes
  • theft
  • burst pipes
  • fallen trees
  • subsidence
  • vehicle collisions

These household “perils” are not all equally common or equally expensive. Storm damage tends to be minor in the UK but, over in the USA, there’s a whole season dedicated to hurricanes.

Often the more unassuming perils are the biggest menace. Take burst pipes for instance, a common hazard in houses left unoccupied in winter. We’re talking about far more than damaged wallpaper – water logged floors and walls are prone to collapsing entirely, bumping up repair costs by an order of magnitude. According to AXA, the average claim for a burst pipe is £25,000 – which is definitely not the kind of cost you want to foot yourself. For more info on the main risks to your home, check out our piece on household perils (here soon!).

How is Buildings Insurance Calculated?

There are two different types of buildings insurance quotes: sum-insured and bedroom-rated. A sum-insured policy starts by asking: how much would it cost to rebuild your property from scratch.

This is a question of internship-at-Google-level fiendishness, and understandably brings with additional costs, such as professional fees. Note that the rebuild cost is not the same as the market value – as market value is largely determined by the value of the land, rather than what’s on it.

With a sum-insured policy, you should have an accurate idea of the real cost of rebuilding your house – and therefore of the total amount of insurance (the “sum insured”) you need. This rebuild cost is likely to increase over the years, so it may be in your best interests to go for an index-linked policy that will update the sum insured to reflect these changing costs. Buildings insurance is not an insignificant expense, and the whole point is that, if things go seriously south, you can get 100% of your house back – not just 85%!

Your alternative to sum-insured is a bedroom-rated quote. Bedroom-rate cover estimates the cost of rebuilding your home based on the number of bedrooms you have. This method is understandably less accurate than sum-insured but, as it tends to overestimate rather than underestimate, it still does what it’s meant to: namely, cover the full cost of rebuilding your home. If you don’t mind over-insuring yourself (that is, paying for more cover than you need), then the bedroom-rated path is the more straightforward one to take.

Common Exclusions

While buildings insurance will cover your property against all kinds of damage, there are also quite a few common exclusions to watch out for.

Your policy is designed to make you immune to specific events – like flooding or house fires – not to general wear and tear. This happens with any house, lived in or unoccupied, and is your responsibility to keep on top of. For some guidelines on what constitutes wear and tear and what does not, see our recent article on landlord and tenant liability.

Other common exclusions for buildings insurance include:

  • Damp
  • Bad workmanship
  • Storm damage to gates, fences and plants
  • Frost damage to outside pipes and brickwork
  • Damage caused by insects, birds or other pests

Useful Additions to Your Building Insurance

All buildings are different, as are the people that dwell within them. So you’ll be glad to hear that you can customise your buildings insurance to meet your specific needs.

If you feel like your home insurance isn’t giving you enough protection, then you can beef it up. A good example of this is home emergency cover. This comes to your assistance during household crises like broken boilers or pest damage – we’ve all been there! This cover usually starts at £30 a year, making it an affordable bolt-on for your policy. Be warned, however, that boiler-related claims can be limited to relatively low amounts and may not cover the full cost of finding a new boiler. That’s less than ideal, so we’ve created a short guide to boiler insurance to help you out (coming soon!).

As we said above, the reason buildings insurance exists in the first place is to protect your house against perils such as flooding, fires, subsidence and earthquakes – by providing for full rebuild costs. But there are plenty of less catastrophic ways we can end up damaging our home’s structure and fittings. This is where accidental damage cover comes in – typically costing in the region of £20 – £100 a year.

Buildings Insurance: Standalone or as Home Insurance?

The most significant add-on to your buildings insurance is, of course, contents insurance. Assuming you’re not letting out an unfurnished flat, the chances are the building contains plenty of your possessions. So, your options are to get:

  • a separate contents insurance policy to go with your buildings policy
  • all-inclusive home insurance covering both buildings and contents

Having a single home insurance policy for both buildings and contents can be cheaper, and is more convenient due to having everything in one place. No-one wants to have two different, equally incomprehensible policy documents, two different premiums and two different customer-service numbers without good reason. So what are some good reasons?

Well, a single home insurance policy is generally less flexible than having specialised policies. This is best illustrated with an example:

You may want to make your home insurance cheaper by paying a high excess (for more on excess payments, check our our Insurance Jargon Buster). If you have, say, a £1000 excess, this essentially means you’re agreeing not to claim on anything under £1000. This saves your insurer money and allows them to charge you lower premiums – and gives you an extra reason to take care of your home. And if something major happens, like a fire or a flood, you’re still covered. So far, so good.

But having a £1000 excess would render much of your contents coverage ineffective – unless all you own are antiques. You could lose a £1000 laptop and not be able to claim back a single penny. And, while lowering your excess to £500 would let you recoup something on the loss of your laptop, it would substantially bump up your overall home premiums – and this might not be worth it just for the sake of one expensive item in your house.

Keeping your buildings insurance and contents insurance separate solves this problem and allows you to have one risk outlook for your property and another for your things. And there’s no reason why you can’t have multiple contents policies. You might want one for your valuables or your gadgets and one for everything else. It all depends how you live and, with a bit of research, you should be able to find a good policy for your needs.

If you’re wanting to get one or more contents policies separately from your buildings insurance, our quick guide to contents insurance will explain everything for you.

Getting Buildings Insurance From Your Mortgage Provider

Most of us, when we buy a property, buy with a mortgage. As explained, your mortgage provider will almost certainly insist that you have buildings insurance. And, beyond this, they will probably offer some as well.

So, should you go through your mortgage provider for your home or buildings insurance policy? Well, before we answer that question, we should dispel a common myth: it is not compulsory to buy your home cover from your mortgage lender. Despite this, many people believe that you do.

It may be convenient to go with your lender but, as you’re free to shop around, you may as well see if you can’t get a cheaper deal elsewhere. And the chances are that you can. It’s reported that by shopping around for the cheapest home insurance policy, you could end up saving yourself up to £200 a year – which is a pretty hefty sum of money.

If you get your cover with another provider, it’s worth noting that your mortgage provider can still reject your choice of buildings insurance if they don’t feel it offers adequate cover for the property you’re purchasing. And there are other reasons not to rule out going with your mortgage lender. One of the key benefits is having everything in one place. No one wants to be juggling their finances in different places and with multiple companies – so taking out home insurance with your mortgage lender can make things simpler.

Whichever route you choose to go down, with a bit of research and an open mind you can find buildings insurance that matches your own requirements and financial capacity, and satisfies your mortgage provider.

Buildings Insurance and Moving House

If you are in the process of purchasing a house, it’s important to ensure that you set up your insurance policies before you move into the property. Do not wait until you have moved in to buy your home insurance. The insurance policy should effective from the point at which you exchange contracts, as this is when the property legally becomes yours. If you don’t have home insurance at the time of the exchange, you will not be covered if there’s any damage to property before you move in.

Likewise, you should ensure your goods are protected while they’re in transit between your old home and your new. The last thing you want when starting your new life at your new home is to find, firstly, that your things got broken and, secondly, that you can’t claim back on your insurance. To avoid this happening, check with:

  • Your current home/contents insurance provider to see if your existing policy will cover your things while they’re on the move
  • Your removal firm of choice, to see if Goods in Transit Insurance is included in their service

Looking to move? Compare the best house removal companies by using buzzmove. Get up to 6 free quotes from trusted, and fully insured, moving companies.

Hopefully, you now have a better understanding of buildings insurance and what it actually entails. While it may seem like an unwanted expense on top of all those mortgage instalments, buildings insurance in a must for any homeowner. Just remember: if something bad were to happen to your property, you’d always have your buildings insurance, and it could save you a phenomenal amount of money.

As one last, parting point: whenever you’re taking out insurance, ensure you’ve read the terms and conditions of your policy and that you’re fully aware of what you’re buying. Insurance can take some digesting. But with a bit of research and patience, it’s really not that complex. Happy moving!

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