Home insurance guide: Buildings insurance

What is buildings insurance?

Buildings insurance covers the cost of rebuilding or repairing damage to your property. Cover is provided for the building’s structure, including its permanent fixtures and fittings such as built-in kitchen units, bathroom suites, and built-in wardrobes. It also usually includes your outbuildings such as garages and greenhouses and cover can also be provided to include boundary walls, fences, gates, drives, paths and swimming pools. General wear and tear to your property is not usually covered.

The level of cover varies extensively between providers. It is therefore important you consider the buildings insurance features that are important to you to make sure you have the right level of cover to suit your specific needs.

What does buildings insurance cover?

Buildings insurance normally covers against loss of, or damage to, your property as a result of the following:

• fire, smoke or explosion
• storm, flood, lightning or earthquake
• riot, civil unrest, malicious acts and labour or political disturbances
• impact from aircraft or other flying objects, or anything falling off them
• water escaping or freezing from water tanks, pipes, equipment or fixed heating systems
• oil leaking from a fixed heating system
• theft or attempted theft
• falling radio and television aerials and dishes, and their fittings and masts
• subsidence or landslips.

Buildings insurance policies can sometimes include features that cover the following:

• liability for accidental injury, loss or damage to third parties and/or their property, up to a given limit (typically £2m)
• the cost of alternative accommodation in the event that your home becomes uninhabitable following loss or damage to your buildings
• accidental damage to underground water, gas and sewage pipes and electrical cables
• cover against the costs of tracing and accessing a leak
• replacement of glass in windows, doors and skylights
• the costs involved to replace the locks of your home if your keys are lost or stolen.

Additional cover options

Two examples of additional cover options that are available with buildings insurance policies include cover against ‘accidental damage’ or ’home emergency cover’. Where cover is available, these features are provided either as standard benefit or as an added extra. An example of accidental damage could include putting your foot through the ceiling when in your loft. If this were to happen, the costs to repair the ceiling, and any other damaged caused, would be covered.

Home emergency cover provides cover for home emergencies that are not always covered in normal home buildings insurance policies, such as:

• roofing problems such as leaks or tiles blown off during a storm or bad weather
• blockages in the toilet waste pipes
• plumbing problems related to leaking pipes, blocked drains, water tanks or leaking radiators
• failure of the central heating system or boiler
• failure of gas or electricity at your home
• failure of the hot water system
• loss of all keys needed to get into your home
• broken or damaged windows and doors that are a security risk.

Buildings insurance exclusions

Exclusions outline what is not included in your policy. There are a number of common exclusions which can include losses arising out of war, terrorism, sonic bangs and wear and tear.

Exclusions can apply to the whole policy or to specific sections of cover. It's important that you read through your policy details carefully to ensure you have the level of cover you need.

Buildings insurance excesses

An excess is the amount of money you will pay towards the cost of a claim. For instance, if you have a £500 excess then you will have to pay £500 towards the cost of any repairs to your home. Excess amounts vary between policies and can be compulsory or voluntary. Sometimes having a higher voluntary excess amount can reduce the amount you pay for your policy.

There are however, a number of insurance providers who will allow you to ‘buy back’ the excess. This means that if you do not require an excess to be applied, it can be reduced to zero (subject to paying a higher premium).

Sum insured

The sum insured that you declare is one the most important factors when taking out buildings insurance and should amount to the full rebuilding cost of the property and not its market value. You should insure your property for the cost of rebuilding it to its exact specification were it to be burnt to the ground.

Some insurers have taken away the need for you to declare the sum insured and now provide a set sum insured limit. Typically a sum insured of £250,000 or more is given, however, there are a number of insurance policies that provide ‘unlimited’ cover for your buildings. These limits are given as standard, irrespective of whether the correct sum insured is less than the automatic cover provided. The limits will generally be acceptable to the majority of consumers. However, if you are a mid or high-net-worth individual, these limits may be too low.

Advising your insurer of the correct sum insured means that they can charge the correct premium. Failing to insure the correct amount will mean that when a claim is made, your insurer could apply an insurance term known as ‘average’ or ‘underinsurance’. This means that they will reduce your claims payment by the percentage that your property is underinsured by.

The rebuild cost of your home can be found on your mortgage agreement, but factors including rising property values over recent years mean you should regularly review your cover to ensure you are not underinsured. The Association of British Insurers’ website provides a helpful tool to calculate your home’s rebuilding cost.

Once you have taken out an insurance policy for your property, most providers will apply a term known as ‘index linking’. This ensures that your sum insured is increased in line with any changes in the cost of rebuilding your property. You must however, check that you have declared the correct sum insured when you first take out your policy to ensure that the index linking cover is correct.

Remember, if you make any home improvements such as an extension or installing double glazing, you should contact your insurance provider so they can update your policy.

Tips when purchasing buildings insurance

• Insurance providers generally provide an extra discount if both buildings and contents insurance are purchased at the same time.
• Purchasing your policy through the insurers’ website could mean that a discount is provided.
• If you have another insurance policy with the same insurance provider, mention this as you could get a discount.
• Insurance providers will usually allow a discount for a higher voluntary excess.
• Check the direct debit fee charge as many insurance providers now offer 0% fees.
• Always check the policy excesses to be certain that you are aware of the amounts you are required to pay if you make a claim.
• Check the cover limits provided for benefits such as alternative accommodation.
• Check whether the insurer makes charges for policy amendments.
• Be aware of any policy endorsements the insurer applies. For example, if your home is unoccupied for a certain period, your insurer may expect you to turn off the water or keep the heating to a certain level.

This home insurance guide is a good start to making a more informed decision about buildings insurance. Our compare buildings insurance tool is a great way of assessing the different features of buildings insurance. Alternatively, you can find the Star Rating of a policy and compare it to others here for a simple overview of the level of cover your insurance provides.