When taking out buildings insurance, you have to make sure you get both the right type and level of cover. Make sure you answer all of you insurance company’s questions truthfully and accurately; failing to mention something important could result in a future claim being rejected.
Types of buildings insurance
There are two types of buildings insurance:
Nowadays, bedroom-rated insurance accounts for over half of all buildings insurance policies in the UK.
The benefit is that the insurance company estimates the cost of rebuilding your home based on the number of bedrooms, and they provide a very high sum to protect you against under-insurance.
Almost half of these policies have a sum insured of at least £250,000.
With this type of buildings insurance, you calculate the cost of rebuilding your home. This is the ‘sum insured’, and includes the cost of materials and professional fees if your home was to be rebuilt. This is different from your home’s market value, which may be higher or lower, depending on your location.
We highly recommend using a chartered surveyor to calculate the sum insured, unless you know a lot about the cost of building homes.
The cost to rebuild your property will increase over time, so index-linked policies are best – they update the sum insured to reflect the changing cost of rebuilding. However, you might still want to have a new survey every few years, to prevent against under- or over-insurance.
Which is right for you?
This often comes down to cost vs convenience.
Bedroom-rated insurance is straightforward and you don’t need to worry about not being adequately covered. The downside is you may be over-insured, and end up paying for cover you don’t need.
Sum insured insurance, on the other hand, can be a pain to calculate, but it means you only pay for the cover you need.
Things to watch out for when comparing policies
- Excess -how much will you need to pay out of you own pocket if you make a claim?
- Index-linked cover – will your cover increase over time to keep up with the increasing cost of building materials?
- Alternative accommodation – will the insurance company pay for you to live somewhere else if your home is inhabitable? (i.e. after a fire or a flood).
- Home Emergency Service – Check if your policy will include cover for heating and plumbing repairs along with other home emergencies as standard, or if it’s an optional extra. Different policies vary widely, so do your research.
- No claims discount – will your premium be reduced if you go a certain length of time without making a claim?
What impact will subsidence have on your insurance
If your area is at risk from subsidence (sinking ground beneath a property) you may have troubles getting buildings insurance, or you could be stuck with substantially higher premiums.
This is because standard insurance policies are priced by postcode, so you can be affected even if your property has never suffered from subsidence.
However, there are specialist insurance providers who provide personalised schemes for properties that are subsiding or are at risk of subsidence.
Specialist insurers look at the individual property, not just the postcode.
Getting insurance cover for ‘non-standard construction’ houses
‘Non-standard construction’ properties can include:
- Listed buildings
- Houses with flat or thatched roofs
- Timber-framed or timber-clad house
- Flats in blocks built out of concrete or with more than five floors
If your property is classified as non-standard construction, most standard buildings insurance policies won’t cover you.
Fortunately, there are still insurance providers that will insure non-standard properties – although it means providing a lot more details about your property.
Try searching online for ‘non-standard construction insurance’ or contact an insurance broker who might have access to more non-standard policies.
Getting insurance for an unoccupied property
Typically, insurance policies won’t cover an unoccupied property. Properties are usually classed as unoccupied if nobody lives in them for at least two months.
If the property is going to be unoccupied, for example if it is waiting to be let or sold, you’ll need to contact your insurer. Most will extend the time limit to three months if you give them plenty of notice and agree to certain conditions, such as increasing security or having someone occasionally check-up on the property.
Failing to let them know in advance could mean you won’t be able to claim if you come home to find your property is damaged.
If you’ll be away for more than three months, you should speak to a specialist insurer, as they may be able to help.
Keeping your policy up to date
Make sure your policy is always up to date to ensure you have enough cover. For example, if you convert the attic or add an extension, your property will cost more to rebuild.
As long as your policy is index-linked or bedroom-rated with a high sum insured, it should keep up with increases in building material and construction costs as time goes on – keep this in mind before you buy.