Buildings insurance covers the cost of rebuilding your home if it is damaged or destroyed. This is usually required if you are planning to buy your home with a mortgage and you may not be able to get a mortgage if you do not take out buildings insurance.
This page tells you what you can expect from building insurance and what you should think about when choosing a policy.
What is buildings insurance
Building insurance covers the cost of repairing damage to the building structure of your property. It also covers the cost of replacing garages, sheds, fences, pipes, wiring, drains, etc.
Your insurance should cover the full cost of rebuilding your home. This includes the cost of demolition, construction clearance and architect fees.
Building insurance usually covers loss or damage caused by:
Fires, explosions, storms, floods, earthquakes
Theft, attempted theft and vandalism
Freezing and bursting pipes
Fallen trees, lampposts, antennas or satellite dishes
Vehicle or aircraft collisions.
If you have a mortgage
Home insurance is a condition of the mortgage and should be sufficient to at least cover the outstanding mortgage. Your lender should give you a choice of insurance company or allow you to choose an insurance company yourself. Unless insurance is included in the loan package, we cannot force you to use your own insurance policy. If you decide to sell your home, you will need to take out insurance until the sale is complete, as you will be responsible for managing it.
If the mortgage lender takes your home back, you are responsible for insuring it until it is sold and must tell the insurance company that you do not live there.
If you don’t have a mortgage
Building insurance is not required, but recommended. Consider whether you can afford to rebuild your home if it is damaged or destroyed.
If you’re a leaseholder
The rental contract may state that you must purchase building insurance with a nominated insurance company, or the owner may provide insurance and charge a fee.
If you’re renting
Landlords usually have insurance and can cover loss or damage to furniture. It can be covered by your home insurance.
How much buildings insurance cover do you need?
It’s important to insure yourself for the amount of money needed to fully rebuild your home. This is called the insurance amount. The cost to rebuild your home isn’t what you paid for it or what it’s worth today if you sold it. The cost of rebuilding is usually lower than the current market value.
To calculate the cost of rebuilding your home there is an online calculator from the Building Cost Information Service on his website for the British Insurers.
Some insurance companies offer unlimited coverage, so you don’t have to calculate the cost of a modification. However, if you already know what they are, it may be cheaper to hunt around for a policy that fits your exact needs. Calculate the amount insured based on a general valuation of years. However, this may not suit your particular property, so you should check to see if you have adequate coverage.
Conversion costs increase over time, so you should check your building insurance coverage regularly.
Some insurers offer policies that automatically increase the premium based on conversion costs.
Keep this in mind when improving your home. For example, extensions or loft conversions can also increase conversion costs, so you should make sure they are covered. If it is a thatched roof, or a designated building, you can pay for a survey from the Royal Institute of Chartered Surveyors to determine the cost of conversion.
Do you need extra buildings insurance?
We recommend purchasing additional home insurance to cover other risks. You will have to pay a higher premium for this coverage.
Flooding or land subsidence if you live in a high risk area
Accidental damage to your home
Alternate accommodation if you have to leave your home after making a claim
Damage to border walls, fences, gates, driveways, Pools
Damage to underground pipes, cables, gas and electricity supplies
Glazing in windows, doors, greenhouses and skylights
Liability coverage when property of others is also damaged
Legal protection coverage