An Introduction to Building Insurance

Buildings insurance protects the structure of your home as well as permanent fixtures and fittings, such as fitted kitchens, baths, sinks and toilets. It usually extends to outbuildings, such as garages, greenhouses and garden sheds too. If you want other features covered, such as fences, gates, parking areas and swimming pools, you will need to check with the insurer.

Buildings insurance financially protects you from many types of damage to your home, ranging from loosing a few roof tiles in a storm, to a major disaster, like a fire or flood. Most policies will cover damage to your home by:

- Fire, explosion, lightning or earthquake

- Subsidence, heave or landslip

- Storm and flood

- Theft or attempted theft

- Escape of water from tanks or pipes

- Falling trees or branches

- Breakage or collapse of television, radio signal or satellite apparatus

- Civil disturbances

- Impact by aircraft, other aerial devices

- Damage by vehicles or animals

- Escape of oil from heating systems

The ‘sum insured’

The value of your home for buildings insurance purposes – the ‘sum insured’ - is restricted to the cost of rebuilding your property and replacing the permanent fixtures, not its current market value. The sum insured is the maximum amount the insurance company can pay you in the event of a claim. It is your responsibility, as a homeowner, to make sure that the sum insured meets the full re-building cost of your property.

As with home insurance, ‘under-insurance’ can be a common problem, so it is advisable to calculate your rebuild costs and also to make sure you tell your insurance company of any significant modifications or additions to your home (for example, a new extension, conservatory or loft conversion) as soon as possible. This is vital as any significant under-insurance could mean that your claim might be reduced or rejected altogether.

Neither the market value nor the council tax valuation band is an accurate guide to the rebuilding cost. To work out the sum insured, the Association of British Insurers has a great calculator on their website. The calculator is based on the ‘Guide to House Rebuilding Costs’ published by the Building Cost Information Service of the Royal Institute of Chartered Surveyors. The calculator gives rebuilding cost information for the five most common house types, related to age, size and location of your property. You might find quite a difference between the cost of rebuilding your property and its market value.

Buying buildings insurance

Some people buy their buildings insurance policy through their building society or lender when they take out their mortgage, as having the right insurance is always a condition of the loan. You don’t necessarily have to take out home insurance with your mortgage lender so it’s worth looking around - Natwest, for example, is currently offering 15% discount for all new customers, and Morethan.com will give you free contents cover when you buy their buildings insurance. In recent years non-traditional businesss, including supermarkets such as ASDA, have also entered the home insurance market and can often offer highly competitive rates as well as a range of other financial services.