When buying a new property there are plenty of extra costs to factor into your budget, as well as the price of your new home. One of these is insurance, specifically buildings insurance. Buildings insurance, along with contents insurance, is one of the two components of home insurance. While contents insurance covers your possessions and belongings, building insurance covers the structure of the property itself.
Although buildings insurance covers the entire cost of rebuilding your home, it isn’t as expensive as many might think. So unless you want to cover the cost of building a new property from scratch, then it is highly advised that you buy buildings insurance!
But are you legally required to buy buildings insurance? What does buildings insurance cover? And what can you do to save money on your buildings insurance premiums?
We are going to take a look at all these questions and more as we explore whether you need buildings insurance.
Do I need buildings insurance?
Buildings insurance is not a legal requirement, though it is highly recommended that every property have it. However, if you have a mortgage, your mortgage contract will likely state that you must have buildings insurance up to the value of the mortgage, which means you are contractually obliged to have it.
Buildings insurance is part of home insurance and can be combined with your contents insurance policy. For full cover, a combined policy is usually the most cost-effective option, and it means that you can rest assured knowing that your home is completely safe!
So let’s jump in and take a closer look at the details of buildings insurance.
What is buildings insurance?
Buildings insurance is a subset of home insurance.
Home insurance is divided into three groups: buildings insurance, contents insurance, and buildings and contents insurance, which provides a combination of the two.
Contents insurance covers your personal belongings, whereas buildings insurance covers the physical building and things that can’t be easily removed such as doors, bathtubs, and walls.
Buildings insurance should cover the full cost of rebuilding your house in the extremely unlikely event that you are required to do so. This also includes demolition, clearance, and architecture fees.
Buildings insurance is split into specific sum buildings insurance and unlimited sum buildings insurance.
Specific sum buildings insurance
Specific sum buildings insurance is a policy that insures you for a specific amount – the cost of rebuilding your entire property.
This is where you are insured for a specific amount, usually how much it would cost to completely rebuild your property.
Unlimited sum buildings insurance
Unlimited sum buildings insurance is a policy that does not limit the amount you can claim on your buildings insurance.
The cost is based on where you live, the type of property you have, and how many bedrooms there are. The insurer will then charge a fixed cost that covers any sum you may need to be covered.
Is buildings insurance a legal requirement?
Buildings insurance is not a legal requirement. However, if you have a mortgage, it is likely to be a condition of the mortgage and therefore it is a legal requirement or else you will be in breach of your mortgage contract.
If you don’t have a mortgage, although buildings insurance is not legally compulsory, it is highly advisable.
If you do have a mortgage, buildings insurance is usually written into your contract and should be at least enough to cover the costs of the outstanding mortgage. Your mortgage lender should give you the freedom to choose your insurer, though they can reject your choice if they want to.
If you are a leaseholder, your lease may state that you must have buildings insurance with a named insurer. Alternatively, the freeholder may take out buildings insurance and charge you for it.
If you are renting a property you do not need to get buildings insurance. Either your landlord will already have it and include the price in your rent, or they won’t have it and will have to cover the cost of any damage to building themselves.
What is covered by buildings insurance?
Buildings insurance covers the cost of repairing damage to the structure and fixed components of your property. This includes things such as walls, doors, sinks, fences, sheds, garages, and baths, as well as pipes, cables, and drains.
You are protected against damage caused by unforeseeable events such as:
- fire and explosions
- storms, floods, earthquakes
- theft and vandalism
- frozen or burst pipes
- fallen trees, lamp posts, aerials, or satellite dishes
- subsidence and sinking
- vehicle or aircraft collisions.
You may also consider taking out optional extras to cover you against other costs such as:
- flooding if you live in a high-risk area
- interim accommodation if you have to stay in a hotel due to property damage
- damage to extra fittings such as a swimming pool or hot tub
- glass in window
- accidental damage caused by a resident or a guest
- homeowner’s liability
- legal expenses.
Some of these optional extras are included as standard in buildings insurance policies.
What isn’t covered by buildings insurance?
Buildings insurance doesn’t cover anything that can be covered by contents insurance. This includes furnishings such as sofas, beds, or carpets.
Buildings insurance also will usually not cover against:
- Wear and tear. Some damage is just a natural occurrence over time. Things like damp, condensation, and rust are unlikely to be covered by a buildings insurance policy.
- Storm damage to gates, fences, and hedges. Although you can get cover for gates and fences, storm damage is usually not included.
- Insects, birds, and pests. Buildings insurance does not normally cover any damage caused by animals or the cost of getting them removed.
How much is buildings insurance?
The cost of buildings insurance largely depends upon the size and location of the building. The more bedrooms you have or the more susceptible your property is to things like flooding, the higher your premiums will be.
In 2021, the average buildings insurance was £109 per year.
However, your policy could end up being quite a bit less or more than that.
How can I save money on buildings insurance?
There are many things you can do to save money on your buildings insurance. Here we will take a look at just a few of them.
Build up a no-claims discount
As with most types of insurance, if you build up a no-claims discount over a period of time, the cost of your buildings insurance policy will reduce.
Of course, this may well mean having to use your own money to pay for various fixes and repairs, so you will have to use your own judgment to discern whether making a claim or paying yourself will ultimately save you more money.
Don’t get insurance from your mortgage provider
If you have a mortgage, your mortgage provider will likely offer you insurance directly from them. This is usually going to be a far more expensive option than sourcing it yourself.
Your mortgage lender should let you choose your own buildings insurance provider, though they are free to reject your choice.
Shop around
Once you have taken the decision not to get insurance directly from your mortgage provider, you should then shop around extensively before settling on a policy.
Often, some of the best deals are not on comparison sites or advertised. Instead, you might consider approaching an insurance broker who can negotiate policies that are specifically tailored to your property’s requirements.
Renew annually
Many people get an insurance policy and then keep it for years without ever reviewing it.
Every year your policy automatically renews, there are new deals, new bonuses, and better providers that you are missing out on.
Be sure to renew your policy each year instead of automatically letting it roll over, and keep your eye out for new deals and bonuses that could save you significant amounts of money in the long run.
Combine it with contents insurance
If you have both buildings and contents insurance but they are not combined, then you should consider combining them under one policy.
Most insurance providers will offer discounts for combined policies, meaning they are cheaper than two individual policies.
Cut out any unnecessary extras
If you haven’t had your buildings insurance policy tailor made to the requirements of your property, then you may well be paying for extras that are unnecessary.
Check everything that you are covered against and remove anything that isn’t relevant. Although you will have to wait until your policy renewal for it to come into action, removing unnecessary extras can end up saving you a lot of money over the years.
Increase your excess
Every insurance policy comes with an excess, which is the amount of money you will pay before making a claim.
For example, if you have an excess of £400 and damage to your property costs £1,000, then you will pay £400 and your insurer will pay £600.
If you voluntarily increase your excess, your premiums will cost less.
Bolster your security
Damage caused to your building can be inflicted by thieves and vandals. Therefore, bolstering your household security can offer extra protection against building damage, which means that it may reduce the cost of your premiums.
Security enhancement can include alarms, cameras, extra locks, etc. If you have any of these fitted you should inform your insurance provider so they can make any necessary changes to the cost of your next policy bill.
Fit smoke alarms
Damage claimed on buildings insurance is often caused by fire. Although it is already required by law that every storey of a property has a fire alarm, installing one in each room is not only safer but may also end up saving you money on your buildings insurance.
Again, you should inform your insurer once you have made any additional fire alarm installments.
Keep on top of your maintenance work
Maintaining a healthy building is important for the longevity of your property and can also save you money on your buildings insurance.
If your property is well maintained, there are some claims that may become unnecessary as the building is strong enough to handle the damage.
Although maintenance does cost money, it can save you money in the long term as it means you will build up your no claims bonus. It also saves you from the trouble of having to make a claim in the future.
Summary
Buildings insurance is not technically a legal obligation, though almost all mortgage contracts will require it for the mortgage to be valid. Therefore, if you have a mortgage you will need buildings insurance.
Buildings insurance provides enough cover to pay for the rebuild costs of your home, which is a fee most people cannot afford. So even if you don’t have a mortgage it is still highly recommended that you get a buildings insurance policy.
