Do I need Buildings Insurance?

Whether you rent or own your own home, it is important to have a good home insurance policy in place to cover you in the event of something bad happening. There are two different type of home insurance: contents insurance and buildings insurance, and most companies will offer the two combined within a joint policy. However, for various reasons, you may decide to use separate companies for each policy, or you may even decide to only take out one type, which begs the question, ‘do I need buildings insurance?’

According to statistics from the AA Insurance Premium Index, an estimated 16.5 million houses in the UK have buildings insurance, so let’s take a look at what buildings insurance is and what it covers you against.

A buildings insurance policy will cover your home against any structural damage and usually also covers damage to the fixtures and fittings within your home. Although policies do vary, the majority of them will cover your home against structural damage caused by:

• Fire
• Theft
• Storms, including lightening strikes
• Floods
• Burst or frozen pipes
• Water damage from leaking pipes
• Subsidence
• Explosions, for example gas leaks
• Falling trees
• Earthquakes
• Vandalism
• Vehicle collisions with the building
• Oil leaking from your heating system

Some policies may also include protection against permanent fixtures within your home, for example:

• Built in kitchen or bedroom furniture
• Central heating system
• Bathroom suites
• Doors and windows

Alongside this, some policies may also cover you for permanent fixtures outside of your home, such as:

• Outbuildings – garages, sheds, gazebos etc.
• Patios
• Driveways
• Garden walls, gates, hedges and fences
• Garages

Buildings insurance will give you the peace of mind that should your home be exposed to any of the above, you will be covered for the cost of repairing the damage or, in really extreme circumstances, the rebuild your home.

So, that’s what you’re covered against, but now let’s take a look at the things your home is NOT covered against. Buildings insurance does not cover:

• Self-inflicted damage, for example a DIY project that has gone wrong
• War or terrorism
• Pollution
• Frost, unless it has caused a burst pipe
• Leaking gutters
• Insects, birds and pests
• General wear and tear

You are also unlikely to be covered if your property has been damaged whilst being unoccupied for more than 30-60 days or more, unless you have informed your insurer and they have agreed in advance to cover you for this period. As with any policy, it is absolutely crucial you know exactly what you are and are not covered for and if you are unsure about anything you must discuss it in full with your insurance provider.

But, we still haven’t fully answered the question –

Do I need buildings insurance?

When you take out a mortgage on a property, many mortgage providers will absolutely insist that you have a buildings insurance policy in place before they commit to giving you a mortgage. So, in short, if you want a mortgage, then yes you need buildings insurance. But, if you are renting a property, it is the landlord’s responsibility to sort out the buildings insurance and the only thing you need to do is to check with them that they have got it!

There are two different types of buildings insurance available:

Bedroom-rated insurance

This is the most common type of buildings insurance and is worked out according to how many bedrooms your property has.? The thinking behind this is that the more bedrooms, the higher the cost of a rebuild, if it was needed. Most of these policies will insure you for a sum of ?250,000 and above. Just make sure you are not paying more than you need to be covered for, but the advantage of this type of insurance is that you can rest assured you will be adequately covered. To give you an idea of how much your home may cost to be rebuilt, use an online calculator like this one from the Association of British Insurers (ABI).

Sum insured insurance

This type of buildings insurance is based on you calculating how much the cost of rebuilding your home would be and consequently only paying for the cover you need. Remember that the figure you provide should not be the market value of your home, as this will be completely different to the rebuild cost. It is advisable to use a qualified chartered surveyor to calculate the sum to avoid any discrepancies and remember that the rebuild cost will increase over the years so you may need a new survey every so often. Or, you may be advised to take out an index linked policy, which will automatically update the insured sum in accordance with the changing rebuild costs.

When you start researching buildings insurance it is worth checking out as many different policies as you can online, for information about what each policy will cover you for and how much each policy will cost you. Quotes will vary depending on each individual property, but the main factors that affect your buildings insurance premium will be the:

• Structure
• Age of property
• Postcode
• Age of policyholder/s
• Number of bedrooms
• Type of property
• Construction material
• Stability of the land
• Risk of flooding

You will also need to decide whether you would benefit from paying for additional extras such as legal cover, which although will increase the price of your premium it may be worthwhile in the long run.