Buildings insurance covers the structure of your home such as the roof, walls and windows. It also includes the permanent fixtures, such as the fitted kitchen and the bathroom suite. Buildings insurance policies vary, but they should all insure your home in case of fire, storm, flood, subsidence, burst pipes, theft and falling trees.
Most insurers offer extra cover if you need it, though you will normally have to pay an additional premium. Accidental damage is one of the most popular policy add-ons. You might also want to consider legal expenses cover.
Buildings insurance will not normally pay out for damage due to wear and tear, or acts of war or terrorism. If your home is unoccupied for more than 30 days during the year, you could also invalidate the policy. Always read the small print before you buy buildings insurance to make sure you have the right cover for your needs.
It is not compulsory to take out buildings cover, but if you have a mortgage on your property the lender will almost always insist that you have adequate insurance. If you are in the process of buying a home, you should make sure you have buildings cover in place when you exchange contracts, as you then have a financial interest in the property.
Where a property is rented, it is nomally the landlord who will take out buildings insurance and not the tenants.
You should have enough insurance to cover the rebuild cost of your home. In other words, if your property burnt to the ground, the insurance should pay for it to be rebuilt. But remember that the rebuild cost is not the same as the sale price or the current market value of your home. In fact, it is often lower.
If you have just bought your home, the rebuild cost should be on the mortgage valuation. Otherwise, many insurers offer free online calculators. Or, you could visit the website of the Association of British Insurers, which has lots of useful information, including a calculator.
It is important to work out an accurate rebuild cost. If the sum insured is too high, you could end up paying over the odds for cover you don’t need. If it is too low, you could be left with an insurance shortfall – and a big bill.
Some firms offer so called unlimited cover, which means they will pay out, whatever the cost. It sounds great, but bear in mind that it might work out more expensive. The insurer might also calculate a sum insured based on the type of property, the number of bedrooms and the area. Again, it’s often a good idea to check the accuracy of the figure yourself.
Experts recommend that you regularly review the rebuild cost of your home to make sure the figure is up-to-date as prices inevitably change over time. You might also renovate or extend your home, which would also affect the rebuild cost.