Buildings and Contents Insurance both come under the bracket of Home Insurance and can either be bought separately or as a combined policy.
The insurance is designed to protect your property and belongings against various perils such as fire, theft or damage.
What’s in this guide?
- Buildings insurance and what it covers
- Types of buildings insurance
- Contents insurance and what it covers
- Extra cover
- How insurance claims are paid
- Next steps
If you take out a mortgage to buy your house, it is a legal requirement to have buildings insurance on the property to protect the mortgage companies interest in your property and , and if it requires repair. If you are looking at selling your house, you will need buildings insurance as a lender requirement at the exchange of contracts.
When purchasing a property (i.e. you have paid the deposit and exchanged the contracts) you are legally responsible for the new property.
If the current tenants/ owners damage the property before you move in or something happens to the property (i.e. storm or flood damage), you will have to pay for repairs.
Having to repair your home if the worst happens can be very expensive and knowing you have the correct cover in place can protect you from this worry.
What is buildings insurance?
This policy usually covers the structure of the property (i.e. roof, walls and floors excluding carpets) as well as the permanent fixtures and fittings.
What does it cover?
Buildings Insurance covers the cost of repairing or rebuilding your home if it becomes damaged. Although policies differ depending on the insurer, you’ll usually be able to claim for things that include but are not limited to:
- Storm or flood damage
- Fire damage
- Water damage from pipe leaks
Policies can also include external structures such as garages, driveways and fences.
What is not covered?
Although most policies differ depending on the insurer, claims from ‘wear and tear’ or damage caused by pests usually are not covered.
If you leave your property unattended for over a certain period (usually 30 or 60 days) then you may have your cover restricted and if the insurer is unaware you are not in the property, then you might not be able to claim on the policy.
Types of building insurance
Most insurance policies are based on one of two options:
- Bedroom rated, where the insurer bases the estimate of the cost of rebuilding your house on the number of bedrooms you have.
- Sum Insured, where you calculate the cost of rebuilding your house from scratch, including professional fees i.e. materials cost and contractor fees.
Contents Insurance covers the loss, damage or theft to things inside of your property that are not part of the structure. Unlike Buildings Insurance it is not a legal requirement to have contents insurance when moving or selling your home.
What does it cover?
Most policies cover all your personal belongings, including furniture, jewellery and electronic goods.
You will also have the option to add on extras, such as Accidental Damage or cover for items away from the home (Personal Possessions Cover).
Your valuables and higher-value items
An overall limit will usually apply for valuables such as jewellery, works of art and sometimes high theft risk goods such as electronic equipment.
There will also usually be a single item limit, such as £2,500. Insurers will need to know if one of your valuables is worth more than this limit as the item will need to be separately listed on the policy.
You can cover the loss of, or damage to your belongings while outside of your home, up to a certain limit. Any single item that needs to be covered that is worth more than the limit (i.e. from £2,500 upwards) will need to be specified.
What's not coverered?
Depending on what is included in your policy will depend on what is and isn’t covered. Examples could include:
- Mechanical or electrical breakdown, such as a fridge breaking down due to it coming to the end of its useful life
- General ‘wear and tear’ such as a worn-out carpet
- Damage caused due to lack of maintenance (tiles falling off a poorly maintained roof)
Some policies may have the option to include extras, to provide a more extensive type of cover to your property and belongings. These include, but are not limited to:
Home emergency cover
This extra can cover the cost of having to deal with an emergency including the costs of calling out a tradesman.
It is designed to cover the cost of time, labour and materials up to a certain limit such as £1500 and can also include accommodation if you are required to stay out of the property.
Legal expenses cover
This extra is designed to cover legal costs of claiming compensation following an accident, or even employment or neighbour disputes.
Know your excess
All policies will have a standard excess which can vary from £100-£500 depending on the insurer. This is the amount you would have to pay upfront in the event of a claim.
There are two occasions throughout the insurance industry when an excess will be increased, this is for any escape of water (around £350) and for any subsidence or heave claims (typically £1,000).
The compulsory excess is set by the insurers, but you can also add on a voluntary excess. Although a voluntary excess can bring your premiums down it does mean that you will have to pay more in the event of a claim.
You must also remember to watch out for any voluntary excesses on top of the compulsory excess, as most people get caught out when they need to make claim and realise how much they are left to pay out.
Cover for Flats, Maisonettes and Leasehold Properties
In most cases you won’t be responsible for the building insurance for flats, maisonettes or leasehold properties, this is usually either covered by the freeholder or management company. You will likely be contributing to the building insurance through maintenance fees or service charge.
Your solicitor will be able to check this for you, and if it is not covered for mortgage purposes you will need to purchase buildings insurance.
If the block of flats has a completely flat roof or is built of non-standard construction, then you will likely need to get cover through a specialist insurer, even if it is a content only policy, as the property will not fit the eligibility criteria for a standard insurance policy.
Running a business from home
If you use your property for Business use, then you will need to notify the insurers.
Most clerical work will be covered without issues, under the standard terms of your home insurance, however, if you have clients visiting the property, or keep stock or money in the property then this will be classed as business use and separate cover is likely to be required.
How insurance claims are paid
If you are required to make a claim for the buildings side of the policy, the likelihood is the claim will be settled directly by the insurer, they will often have their own preference of tradespeople that they use on a regular basis, saving you time on finding someone to repair the damage. However, you can recommend a local tradesman if you would prefer this.
If the contents of your property are damaged, the insurer will either:
- Pay out the full cost of the replacement (less any excess)
- Pay for the repairs
Notifying your insurer as soon as you can after any damage or loss will make the process easier to complete, remember to get a crime number in cases of theft and provide as much information as possible.
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