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What is buildings insurance?

Buildings cover offers protection for your bricks and mortar. But what exactly are you covered for?

A row of terraced housing

What does buildings insurance cover?

Buildings insurance covers the cost of rebuilding your home if it’s destroyed or damaged by:

  • Fire
  • Lightning strike
  • Storm damage
  • Falling trees
  • Explosion (caused by gas leaks etc)
  • Earthquake
  • Vandalism
  • Vehicle collisions with the building
  • Burst pipes or freezing of the plumbing

External garages, sheds and fences tend to be covered, as well as the cost of replacing items such as pipes, cables and drains.

Permanent fixtures such as the roof, walls, ceilings, floors, doors and windows, fitted kitchens, built-in cupboards and bathroom suites might also be covered.

Buildings insurance should also cover the cost of demolition, site clearance and architects’ fees.

If you’re planning to buy a home using a mortgage, buildings insurance might be a condition of the mortgage. If so, it usually has to be at least enough to cover the outstanding mortgage.

Buildings insurance is a specific form of home insurance. While it’s not compulsory, it could be worth considering if you’re a homeowner.

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Do I need buildings insurance?

If you have a mortgage on your home, you’ll likely need buildings insurance.

Your mortgage lender should give you a choice of insurer or allow you to choose one yourself.

If you’re buying a house, you should take out buildings insurance when you exchange contracts.

If you sell a house, you’re responsible for looking after it until the sale is completed so it’s worth  keeping your insurance cover until then.

If you don’t have a mortgage on your home, buildings insurance isn’t compulsory, but you should seek independent financial advice about this matter.

 

Can I get buildings insurance if my home is at risk from subsidence?

Most building insurance policies should cover subsidence to your home as it’s standard in most policies.

However, if your home has been previously affected by subsidence, then you might find it more difficult to find an insurer who will insure your home.

It’s important to be honest with any insurer at the early stages of finding a buildings insurance policy.

You must tell them of any glaring issues associated with the building. If you don’t, you’re at risk of invalidating your policy.

If you choose not to tell the insurer about issues like subsidence, this could have a long-term effect if you choose tomake a home insurance claim.

If you can't find an insurer who’ll cover you, it might be worth trying a specialist broker.

The British Insurance Brokers' Association (BIBA) can provide further practical advice and can recommend a specialist if you suspect your property has subsidence.

What is subsidence?

Subsidence is when the ground beneath a building sinks, pulling the property’s foundations down with it.

It usually occurs when the ground loses moisture and shrinks, which can be caused by prolonged dry spells.

It might also be caused by trees and shrubs that can absorb significant volumes of water from the soil.

There are several main causes, as defined by the Financial Conduct Authority (FCA): heave, landslip, settlement and subsidence.

Heave

This is upward movement of the ground beneath a building as a result of the soil expanding.

Landslip

This is downward movement of sloping ground.

Settlement (also known as consolidation or compaction)

This is downward movement as a result of soil being compressed by the weight of a building within 10 years of construction.

You can normally assess whether your home is at risk from subsidence if you live in an area with high clay content, for example.

What to look out for

Another thing to be aware of when you take cover out for subsidence is that the insurer might ask for an excess on your policy.

How can I lower the risk of subsidence?

There are a number of ways you can lower the chance of subsidence near your home:

  • Don’t plant trees or large shrubs too close to your home.
  • Regularly maintain or prune trees or large shrubs near your home, if they’re already planted.
  • Carry out regular maintenance checks to your home, looking at drains, gutters and pipes.

 

How does flooding impact buildings insurance?

Unfortunately, more than five million people in the UK live and work in 2.4 million properties that are at risk of flooding from rivers or the sea.

In addition, one million people in the UK are also at risk of surface water flooding.

As with subsidence, if your home has been flooded in the past, you might find it difficult to get cover at a lower cost.

How can you find out if you live in a flood risk area?

You can find out if you‘re in a flood risk area by going onto the UK government website and typing in the postcode of your home.

If you live in a flood zone, there are a few things you can do to lessen potential damage:

  • If you want to stop sewage backing up into your home during a flood, have your drainage pipes fitted with one-way valves.
  • Raising the height of plug sockets should lessen the chances of electrical damage.
  • Permanently fit doors, air bricks, and low windows with flood skirts. If there’s a flood, these slide into place to form a watertight barrier.
  • Keep important documents, including contact details for your insurer and a copy of the policy, in a waterproof bag.
  • Replace downstairs wooden flooring with concrete. It sounds sacrilegious, but it’s practical.
  • Have your downstairs walls re-plastered with a special water-resistant render.

 

Do flats need building insurance?

If you own a flat or our part of a block of flats, you can either buy an individual buildings insurance policy or if your flat is managed by a block agent, they should do this for you.

Hopefully, the block agent will find you and the other flat owners the most competitively priced buildings insurance policy.

 

Do I need buildings insurance if I'm renting or leasing a flat?

If you’re leasing a flat, the person who owns the freeholdmight have insured the building already.

If you own a share of the freehold with other people in the building, you might have to get the cover yourself.

If you’re a tenant, then you don’t normally need to invest in a buildings insurance policy. It should be your landlord’s responsibility to insure the building.

You might still want to take out a contents insurance policy to protect your belongings though.

 

What does buildings insurance cover in a flat?

If you live in a flat as a tenant it’s usually the responsibility of the landlord to have a building insurance policy in place, so you won’t need to worry about this.

But if you’ve bought your flat and have a mortgage, your mortgage provider might require you to have buildings insurance.

If you’re a leaseholder, the buildings insurance for a block of flats may be covered by the freehold owner. Although it's common for leaseholders to jointly own the freehold and share this.

Whatever the type of property – a house or a flat, buildings insurance covers the cost of repairing your home if it is damaged by:

  • A water escape or leak
  • Fire
  • Storm
  • Subsidence
  • Malicious damage
  • Falling trees.

The policy should cover you for the full cost of rebuilding your home in the worst-case scenario and give you a certain degree of peace of mind.

 

What is the difference between contents and buildings insurance?

The main difference between contents insurance and buildings insurance is that contents insurance covers the stuff within your home, for example:

  • Sofas
  • TV
  • Laptop
  • iPad
  • Jewellery
  • Clothing.

Buildings insurance covers the external structure of your home – walls, roof, for example as well as fixtures and fittings – fitted kitchens and bathroom suites.

 

Do I need unlimited buildings insurance?

Unlimited buildings insurance is exactly what the name suggests – there’s no limit to how much you can claim on your building insurance. For example, if you’ve had to carry out extensive repairs or rebuild your home.

Taking out such a policy might be viewed as being a bit excessive.

However, if you have a large or expensive home, or if you live in a flood risk zone, then taking out unlimited buildings insurance might be worth considering

However, be prepared to pay an excessive amount for this benefit.

 

What to do when looking for buildings insurance?

  • Shop around for the best buildings insurance policy – there’s a lot of competition!
  • Get a buildings insurance policy most suited and tailored to your needs
  • Make sure you read all the terms and conditions before you buy your buildings insurance policy.

 

What about new-build home insurance?

If you’ve bought a new build home, hopefully the builder or property developer is registered with the National House Building Council (NHBC).

If this is the case, your home should be covered by its 10-year warranty and cover, which is called Buildmark.

 

What will Buildmark cover?

Unlike buildings insurance, Buildmark doesn't offer protection against accidental damage.

Buildmark should pay for damages or defects that appear during the first two years after you've bought the new-build house.

It should also cover any structural damage, during years three to 10.

If you sell within 10 years, the remaining years of cover could be transferred to the new owner.

This might be an attractive selling point for potential buyers.