Home insurance falls into two forms – buildings insurance and contents insurance. Buildings insurance covers the physical structure of the home – including fixtures like sinks. Contents insurance covers your possessions within the home.
Buildings Insurance Or Contents Insurance?
A popular concept in the insurance world is that if you turned your home upside down everything that falls out would be considered contents. You could also think of buildings as covering anything you couldn’t take with you if you moved home.
Buildings cover is important because it looks after the physical structure of the property – the most valuable part of it. For this reason, a mortgage provider will normally insist that you take out appropriate buildings cover in order to safeguard their interest in your property.
If you don’t have a mortgage then buildings insurance can still be a wise idea in case something goes wrong like leaks.
If you are renting your property then it is your landlord’s responsibility to take out buildings insurance. However, you may want contents insurance for your personal possessions.
The rebuild value is the amount it would cost to rebuild your property if it were completely destroyed by fire or another disaster. That’s not to be confused with the market value.
What to Look For in Buildings Cover
As with all insurance, you need to find the cover that is most appropriate to your needs. However, some of the key aspects that can vary in home insurance are
If you have to vacate your property while repairs are made, some buildings insurance policies will pay for alternative accommodation depending on your circumstances.
Accidental damage cover is normally an added extra that covers you for DIY disasters that you have caused yourself like drilling through a pipe or damaging a wall.
Buildings Insurance Excess
The excess is the amount you pay towards any claim. Generally a higher excess will result in a cheaper premium.
No claims discount
If you have had buildings cover for a number of years without a claim you will probably get cheaper premiums than if you either had a claim or haven’t had buildings insurance before. This is to do with your risk profile as a good track record makes you seem a lower risk.
Most insurance policies will require your property to be occupied most of the time, although normally a short holiday is no problem. However, for second or otherwise unoccupied homes terms can be arranged so that the property can be unoccupied for longer periods of time.
How to Arrange Buildings Insurance Before Exchange
When you’re buying a property insurance may not be the first thing on your mind in this stressful experience. However, as soon as you exchange contracts and the sale becomes binding you are responsible for any repairs even though you may not move in for a while after. Any random accidents or events are therefore your responsibility – like if the property burns down. Again if you are buying with a mortgage your lender will probably have provided guidance on this.