Buildings and Contents Insurance Guide 2018
Buildings and Contents Insurance both come under the bracket of Home Insurance. It is there to protect your property and belongings from different circumstances such as fire, theft or damage. Buildings and Contents can either be bought separately or together on one policy.
What’s in the 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
- Download the guide
If you own your own home, it is a legal requirement to have buildings insurance on the property, just in case something happens and it needs to be repaired. If you are looking at selling your house, you will need buildings insurance by legal requirement to complete the sale and exchange of documents.
When purchasing a property (i.e. you have paid the deposit and exchanged the contracts) you are legally responsible for the new property. So 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 were to happen can be very expensive and so buildings insurance saves you from that financial misfortune in the future.
What is buildings insurance?
This policy usually covers the structure of the property (i.e. roof, walls and floors) 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
On some policies, premiums could 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 a certain period of time (usually 30 or 60 days) then you will have restricted cover and if the insurer is unware 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 estimates 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 of your personal belongings, including furniture, jewellery and electronic goods. However, some insurers offer different levels of insurance, but you will usually be covered for theft, fire and flood.
You may also have the option to add on extras, such as Accidental Damage or Personal Possessions (i.e. items you take outside of your home).
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 £1,500 for example. You should tell your insurer if one of your valuables is worth more than these limits as you may still be able to cover them by paying an extra premium.
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 £1,500 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
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 covers the cost of having to deal with an emergency including the costs of calling out a tradesman.
It usually covers the cost of labour and repairs up to a certain limit, and may include accommodation if the repairs you need require you to stay out of the property.
Legal expenses cover
This extra covers the 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 is usually £100 (although this varies from insurer). This is the amount you would have to pay upfront in the event of a claim. There are two occasions where excess will be increased and this is for any escape of water (around £250) and also for any subsidence (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 always remember to add any voluntary excess on top
of the compulsory excess as most people get caught out when they need to make claim and realise how much they then have to pay out.
Cover for Flats, Maisonettes and Leasehold Properties
In most cases you won’t be responsible for the buildings insurance for flats, maisonettes or leasehold properties. This is usually either covered by the freeholder or it is sorted out by the management company. You will likely be contributing to the building insurance through maintenance fees or via the service charge. You will be responsible for checking this, and if it is not covered for mortgage purposes you will need to then get Buildings insurance.
If the block of flats has a completely flat roof and you are the top floor flat, then you will likely need to get cover through a specialist insurer, even if it is a contents only policy, as you will not fit the eligibility criteria for most insurance policies.
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 with no issues. However, if you will be having visitors to the property, or keep stock or money in the property then this will be classed as business use. A certain amount might be covered under normal terms but you would need to make any business use known so that it is properly covered.
How insurance claims are paid
If your property becomes damaged and is in need of repair, the insurer will usually arrange the repairs directly. 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) or pay for the repairs.
Notifying your insurer as soon as you can after any damage or loss will make the process easier to complete. Making sure you give them as much information as you can will also help the process. You may be asked to supply photos of the damage or a police report if something was stolen.
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