Not something any of us want to spend too much time thinking about, but building insurance is a necessary evil, both for securing a mortgage and for protecting your new asset. Contents insurance comes as part of the package and although optional, we’d highly recommend you take it out in order to protect your personal possessions.
With the amount of equity tied up in property today, it pays to do a little research. You’ll want to be confident you’re with a reputable provider, have chosen the right level of cover and will be adequately compensated should the worst happen.
What is building and contents insurance?
- Building insurance will cover you in the event of damage to the structure of your home, such as the walls, roof or floors, and frequently covers damage to fixtures and fittings too. It is usually a condition of your mortgage to have it.
- Contents insurance will cover you for loss or damage to personal possessions in the event of fire, theft, flooding and similar incidents. It will cover all your household items – anything not physically attached to the building – against the cost of loss or damage.
They can either be bought individually or together as a combined product. If you do need both buildings and contents insurance, we would advise buying them on a combined policy as it is more cost-effective and will make life easier if you need to submit a claim.
Do I need building and contents insurance?
Many people will need both buildings and contents insurance, but some may only need one type of cover.
- If you’re a homeowner, you should have both. It is a prerequisite for most mortgages but also advisable where you’ll own a property outright. In the event of damage, the costs for repair or rebuilding can be eye-wateringly high.
- If you’re buying a leasehold flat, the building should already be insured by the freeholder but you may have to pay a contribution via your service charge. If you do own part of the freehold with other leaseholders, you will jointly be responsible for taking out the building’s insurance.
- If you’re a landlord, you might only need building insurance. You will only need to take out additional contents insurance if you are letting your property with furniture.
How much should it cost?
Building insurance
The premium you will pay for building insurance will depend on how much it costs to rebuild your property. Recent figures show that the cost of rebuilding a home in the UK has rocketed in the past few years and now stands at an average of £243,000. If your home is above average size (1,400 square feet) and/or contains premium features, you can expect to pay more to insure it.
Building contents insurance
Most insurers offer you three options for calculating the value of your possessions:
- Bedroom rated’ – the insurer works out how much contents cover you need (the ‘sum insured’) based on the number of bedrooms you have. These policies typically provide between £40,000 and £50,000 of cover as standard.
- ‘Sum insured’ – you (not the insurer) have to calculate the amount of cover that you need. Ideal if you have a lot of expensive items that will exceed the standard sum offered with the ‘bedroom rated’ method.
- ‘Unlimited sum insured’ – all your contents are covered without limit, so you don’t have to worry about being under-insured.
To extend the level of cover you can pay to insure your items while abroad or you can list a particularly valuable item (such as an engagement ring) separately to make sure you will receive a full payout if stolen or lost.
There are so many variables at play that will affect your premium. These include factors such as whether you want basic level or unlimited cover, want to include accidental damage, and how much excess you are prepared to pay. Excess, i.e. the amount you must pay towards your claim, can comprise both compulsory and voluntary sums. Usually, when you increase the amount of excess you’re happy to pay, you will decrease your premiums.
The average combined cost paid by homeowners is now approximately £300/annum for a typical home where up to £50,000 worth of goods are covered.
Where to get building and contents insurance?
- Comparison sites – make sure you look at a few and remember cheapest isn’t always best. More tips on using comparison sites
- Go direct to the insurer, some of the most well-known firms do not feature on the comparison sites.
- If your needs are complex (eg. you are a landlord with several properties to insure) it’s worth seeking the advice of an insurance broker.
Michael Hardy would be more than happy to advise which type of home insurance would be appropriate for your circumstances. Please do not hesitate to contact us on Wokingham 0118 9776 776 or Crowthorne 01344 779 999.
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