Householders Guide

Buildings Insurance

Buildings insurance – Covers you against loss and damage to the structure of your property in the event that something unforeseen event should happen. Usually your property is covered against the following events:

  • Flood, fire or storm damage
  • Subsidence
  • Damage caused as a result of theft
  • Collisions from motor vehicles, for example cars, buses, lorries, etc

As well as providing cover for structural problems to the property, buildings insurance will provide cover for permanent fixings like, baths, basins, toilets, fitted kitchens, doors and windows.
The policy will also cover outside structures such as garage, sheds, greenhouses, walls, fences, gates, paths and driveways.
Some policies may even provide cover for accidental damage to underground pipes and cables, windows, baths, basins and toilets.

Over the years the world has experienced an increase in extreme weather conditions, one minute a drought, the next torrential rain followed by flooding. These extreme conditions will clearly have an effect on your property which will be reflected in your building insurance policy. If you live in an geographical area prone to flooding insurers are likely to be charged higher premiums and in some cases won’t insure you at all due to the high risk factor. Conversely, drought can cause shrinkage in the soil, especially clay, this can cause foundations to subside, again this will have an effect on your building insurance premium.

In the US and some outer countries, buildings insurance is compulsory and included as a condition of the mortgage. These policies are based on a term contract fixed for a period of time. A premium is then paid to the insurer at the start of each fixed term.
In other countries where buildings insurance is not compulsory, it is still considered an essential requirement.

In countries where buildings insurance is not compulsory, a mortgage provider will insist that you take out a policy with them in exchange for the service they’ve provided you. You will of course have to make your own arrangements regarding contents insurance.

The term ‘sum insured’ is the total amount of money your property is insured for and the maximum an insurer will pay out. It is also the amount it would cost to rebuild your home form scratch, however this won’t be the properties market value.
There are two type of buildings insurance, each has a different method of calculating the sum insured:

  • Sum insured insurance – You will need to calculate the sum insured yourself, if in any doubt professional advice form chartered surveyor.
  • Bedroom-rated insurance – Your insurers will calculate the sum insured based on the number of bedrooms your property has.

Subsidence occurs when the ground beneath the property starts to sink and causes the property to move on its foundations.
Subsidence will increase the risk level on a building insurance policy and therefore result in higher premiums or excesses. If your property has been effected affected by subsidence you should be able to have your property insured so long as professional repair work has been carried out.
There are many ways you can minimize the risk of subsidence, for example:

  • Take action at the first signs of any structural damage to your home, for example, if you notice any large cracks appearing in walls get them checked by a professional. The quicker problem is identified the easier and cheeper it’s remedied. Not all cracks are a sign of subsidence so don’t panic, any crack which are not evidence of subsidence can be easily repaired.
  • If you are planting trees around your home, find out their mature height and how large the spread of their roots. Tree roots can infiltrate and damage foundations and drains, so plant them at a safe distance form your property.
  • Removing large established trees could destabilise your home’s foundations, especially areas where there is clay soil. If in any doubt consult a specialist.
  • Prune shrubs and trees to a manageable height. This will minimize the risk of the soil drying out and help prevent subsidence developing.
  • Keep gutters clean, regularly remove any dirt, rubbish or leaves. The same goes for drains clear any blockages immediately.
  • Regularly inspect pipes for leaks especially during the cold winter months.

Once you have your buildings insurance set in place you will need to make sure your policy remains up to date. Most insures will include index-linked cover as standard. This will automatically update the sum insured (the rebuild cost of your home) inline with the rising cost of building materials and labour.

Normally a buildings insurance policy will have exclusions in place and is unlikely to pay out for in the case of certain events, such as:

  • Wear and tear
  • Damage caused by frost, except damage caused by a burst pipe
  • Storm damage to fencing
  • Damage caused by birds, insects and other pests
    Leaking guttering

Exclusions will vary from policy to policy so you’ll need to find these out before selecting your policy to avoid any nasty surprises.