Buildings insurance is compulsory if your home is mortgaged as the lender will be looking to ensure their interest is protected also
Buildings insurance is compulsory if your home is mortgaged as the lender will be looking to ensure their interest is protected also. Many Lenders will offer you their own insurance policy for this purpose. This is often more expensive than what you could obtain by looking elsewhere.
What will buildings insurance cover?
Buildings insurance covers the structure of your home
including permanent fixtures and fittings from fitted kitchen units to
Typically buildings insurance policies will cover you for risks to the property structure as a result of a number of perils, such as
- Escape of water
It is important to check your policy summary for what is excluded from cover as well as what is covered.
The insurer may invalidate any claims where you have failed to disclose material facts to them or have left the property unoccupied for more than 30 days.
How much buildings insurance do I need?
You need to be insured for the amount it will cost to completely rebuild your home. This is not the same as the Market Value of your home. You can determine the rebuild cost of your home by appointing a surveyor to assess your home or by using an online calculator available on certain websites. If you are just purchasing your home the rebuild figure will normally be given in your Mortgage Valuation.
Whilst the rebuild figure is usually less than the Market Value of your home the amount may increase if your property has special features such as a thatched roof or is a listed building. In these circumstances it is usually recommended to obtain the rebuild figure from a surveyor.
Insurers may also offer “unlimited cover” policies however if you know the rebuild cost of your home then it may be cheaper for us to find a policy that fits your exact needs rather than paying for cover that you do not require.
Once you have purchased your policy it is necessary to keep it up to date you must keep us informed, reflecting any changes you have made such as extensions or loft conversions and that the amount insured reflects the rebuild costs at the current time. Some insurers will offer policies that are “index linked”. This will ensure that the amount insured moves in line with rebuild costs at the same time. This is important as if you are underinsured your insurer may reduce the settlement on any claim you make proportionately.
It is your responsibilities to make sure you are adequately covered and that you have advised us of all changes.
If you live in a risk area for flooding or subsidence or your property has special construction features then additional cover may also be required
How to make your buildings insurance cheaper
Whilst it is important to ensure that you are adequately covered for the rebuild cost of your home there are ways in which you can look to save money when purchasing your buildings insurance policy.
- Be clear about what level of cover you need and make sure that you compare like for like when looking at different insurers. This also applies to renewal quotes – do not assume that this is the cheapest cover available.
- Pay your premiums annually – Many insurers will include an additional charge on your premium for paying monthly by direct debit. Where possible this charge can be avoided by paying your insurance off in a one off payment every year.
- Raising your policy excess – Many insurance policies include an excess that you will need to pay in the event of a claim. Raising the amount you are willing to pay usually results in a reduction to your premium
- Combine with contents insurance – Where you need to buy both buildings and contents insurance it is sometimes cheaper to combine them and buy your policy with the same insurer
- No claims discount – Insurers will usually reward those that have accrued a period of no claims with a cheaper policy premium
- Security – it often pays to be secure in your property to try and prevent claims happening. Installing a burglar alarm, high quality locks, joining a neighbourhood watch and fitting smoke alarms can all reduce your premiums.
These types of plan will have no cash in value at any time, and will cease at the end of the term. You should be aware that if premiums are not maintained, then cover will lapse.
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