What does building insurance cover?

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A commercial buildings insurance policy is essential to cover the cost of rebuilding your property if it is extensively damaged or completely destroyed. A policy also provides cover for costs incurred in fixing any damage to the exterior of the building.

If you are buying a home using funds from a mortgage, your mortgage provider will usually specify that you take out a compulsory building insurance policy, as they will typically not offer you a mortgage without sufficient cover.

What is the difference between buildings insurance and contents insurance?

The key difference between buildings insurance and contents insurance is that buildings insurance covers the exterior of the property against damage or destruction, while contents insurance covers any property which is kept within the building itself.

What does a building insurance policy cover?

As a general rule, most buildings insurance policies provide cover for:

  • The cost of repairing damage sustained to the exterior structure of your property
  • The cost of repairing damage to any garages, fences and sheds
  • The cost of repairing or replacing damaged pipes, drains or cables
  • The cost of repairing or replacing your bathroom or kitchen

Specific buildings insurance policies do vary, so make sure you check your own policy to determine what you are covered for.

Make sure that your buildings insurance policy covers the total cost of rebuilding your house if it is destroyed or damaged beyond repair. This amount is known as the ‘sum insured’ and should also include the cost of demolition, site clearance and any necessary fees associated with a repair or rebuild such as those of builders or architects.

The cost of rebuilding your home under the terms of your insurance policy will not be the same as the price you originally paid for the property, or its current market value if you were to list it for sale. Rebuild costs are typically considerably lower than the market value of a property.

What does cover for loss or damage include?

Your buildings insurance policy will provide cover for loss or damage.

Generally, this will include damage caused by:

  • Fallen trees
  • Fallen aerials and satellite dishes
  • Fallen lampposts
  • Theft and attempted theft
  • Vandalism
  • Fire
  • Floods and storms
  • Explosions
  • Earthquakes
  • Frozen and burst pipes
  • Escape of water
  • Escape of oil
  • Subsidence
  • Vehicle or aircraft collision

What is excluded from a building insurance policy?

You buildings insurance policy will not cover anything that can be removed and taken to a different property, as these items are classified as ‘contents’. As such, they would be covered by your separate contents insurance policy.

Do I need different buildings insurance if I rent my property?

The building insurance cover you need will depend on whether you are a tenant, a freeholder or a leaseholder.

If you live in a leasehold flat, you should not need to take out a separate building insurance policy as the freeholder, landlord or property management company will be liable for the exterior of the property, making sufficient buildings insurance their responsibility. You will only need to have a valid contents insurance policy to cover your possessions.

If you are a freeholder, the terms of your mortgage will specify you must have sufficient buildings insurance cover.

If you do not need a mortgage or you have paid your mortgage off in full, it is still advised you take out buildings insurance to cover you in the event that your home is damaged or destroyed.

If you are a leaseholder, the terms of your lease may specify that you must have a valid building insurance policy. If you don’t comply with these terms, the freeholder may take out the policy, then charge you for it.  

If you are a tenant, your landlord will generally be liable for buildings insurance, although you may be responsible for any damage to the property’s fixtures and fittings. These costs may be covered by your contents insurance policy, but make sure you check.

Do I need extra buildings insurance cover?

A standard building insurance policy should be sufficient for most needs, as a standard policy will generally include cover for:  

  • Flooding or subsidence if you live in a high risk area
  • Accidental damage
  • Alternative accommodation if you have to temporarily move out of your home during a claim
  • Damage to boundary walls and fences
  • Damage to gates and driveways
  • Damage to swimming pools
  • Damage to underground pipes and cables such as gas and electricity supplies
  • Damage to glass including windows, doors, conservatories and skylights
  • Liability cover if someone else’s property is also damaged
  • Legal expenses cover

You may wish to consider taking out extra buildings insurance to cover you for other risks that aren’t included in your policy as standard.