Home insurance: Buildings insurance guide
Buildings Insurance
There are two types of home insurance – buildings insurance and contents insurance.
Buildings insures against damage or destruction of the bricks and mortar and fixtures and fittings of a home. Contents insurance, as the name suggests, insures against loss or damage to other, re-moveable, items inside a home.
They both cover you against theft, fires, subsidence and other threats and they can be bought separately or together.
Buildings Insurance
Taking out buildings insurance involves paying an insurer so that in the event of any of your home's fixtures and fittings being badly damaged or destroyed you will be able to claim money back to pay for repairs or replacements.
What does it cover?
Building insurance policies cover pretty much everything permanently built into home, including the house itself and any outbuildings such as garages and sheds. Baths, toilets, fitted kitchens, cupboards and permanent decorative features. Swimming pools – if you are lucky enough to own one – are also covered.
There are grey areas over items such as boundary walls, gates and paths – and outdoor swimming pools. Some policies cover these, other don't, so be aware when choosing a policy.
Buildings insurance will cover a house and its fixtures and fittings against a range of "perils" – the term given for events that could cause damage or destruction to your home.
These include: fires, explosions, lightening, an earthquake, storms, floods or falling trees or branches.
If subsidence occurs – that's covered or if your home suffers a theft or damage from an attempted theft, this also entitles you to claim.
Water leakage from tanks or pipes, breakage of television or satellite aerials or escaped oil from heating systems is covered.
Building insurance also covers the threat of riots or civil commotion.
The insurance will also cover costs involved should you need emergency accommodation while repairs are carried out. It also covers you for liability of damage to another person or to another property.
Calculating how much buildings insurance cover is needed?
To find out how much your home must be insured for, you need to find out how much it would cost to re-build the property. This is not the same as the value of the house. It's very important to get an accurate valuation because while it's pointless paying too much, if you estimate the rebuilt cost at a lower amount and your home is destroyed in a fire you won't receive enough to rebuild it. Worse, your insurer might even reject the claim. You can find out the rebuilding cost via the Building Cost Information Service (BCIS) run by the Royal Institution of Chartered Surveyors.
How to get lower costs
As with all insurance, shopping around is important to ensure you land the cheapest deal. The size and the age of the property, whether it is detached or not, the location – is your home in a salubrious area low on crime or is it in a rundown site? - and whether you have installed decent security will affect premiums.
The BCIS suggests, if your property suffers slight damage, to do everything you can to stop it getting worse. Most policies cover costs of temporary work and even supply helplines to search for local tradesmen. This can prevent the problem getting worse.
It also suggests taking all precautions to prevent the worst from occurring. Tree roots in gardens, for example, can cause damage to neighbours' properties so getting advice on felling or planting trees can be a good preventive measure. It's also worth carrying out regular checks for block drains and gutters. Meanwhile fitting smoke detectors and checking these regularly can reduce risk from fire.
If you live in a flood-risk area, ensure you check local media for warnings that you could be about to suffer a deluge and take necessary precautions such as putting down sandbags.
Pitfalls
As with many forms of cover, buildings insurance claims come with an excess – an initial payment the insured must fork out towards the cost of repairs (the insurer pays the rest). Most people pay around £50 but people taking out claims for subsidence can be saddled with a £1,000 excess.
As mentioned earlier, the temptation to under-insure your property in a bid to pay lower premiums simply won't pay off if you need to make a claim. Misinformation could lead to a reduced sum or rejection. It is worth getting your rebuild cost altered if you have major refurbishments to your home. Make sure your insurer knows in advance if you have any building work done to your home too.
Check your policy for exclusions. There might be a number of tiny and seemingly insignificant clauses which prevent you from claiming. For example your insurer might not allow you to claim for damage caused by rain if only a few millimetres have fallen.
When paying for buildings insurance, some people can be charged high rates of interest for setting up direct debits. The best advice is to save up.