Buildings insurance provides homeowners with peace of mind that in the event of catastrophic damage to their home from fire, flood, settlement or structural collapse and public liability, they receive financial recompense.
Buildings insurance generally includes:
• Somewhere to stay if your home is unfit to live in
• Accidental damage to underground drains and pipes
• Homeowner’s liability such as a claim made against you by a visitor who is injured whilst at your home.
• The cost of repairing damage to the structure of your home
• Damage to fixtures, fittings, doors, windows and the roof
You are also insuring the property for the full cost of rebuilding it from the ground up. This works in two main ways:
1. Specific sum insured buildings insurance
This is where you are insured for a specific amount, generally the cost of completely rebuilding your property. This includes all the work needed to clear the space and start again from scratch. When sorting out your policy, you will need to know this figure because it is essential you are insured for the correct amount, or you could be underinsured. If you are insured for less than it would cost to rebuild your home, you will have to pay more towards the work.
2. Unlimited sum insured buildings insurance
This is where the amount you can claim is not capped at a certain amount, and you do not need to worry about how much it will cost to rebuild. Your insurer uses the information you told them about your home to decide how much your premium will be. This includes factors such as your address, the type of property being insured and how many bedrooms it has.
What can affect buildings insurance premiums?
Buildings insurance can be expensive, so it may be wise to select and adapt your policy to ensure you have the best cover you can get at the most affordable cost. There are a number of factors that can affect the “premium” (the annual cost of the insurance policy). An insurance provider will take into account a wide variety of things when working out what your premium will be.
One of the first things an insurance provider considers is the precise location of the property. They will look at things such as crime rates; if the area has a higher-than-average burglary rate, then you may find your premiums are higher.
The likelihood of your home being affected by a flood also plays an important role in the pricing of buildings insurance policies. If your home is in a flood risk area, then your premium is likely to be higher. For high-risk properties that attract extortionate premiums, a scheme called Flood Re has been set up to help homeowners find affordable insurance. You can also read more about flood risks in our article here.
Those who have made claims within the last few years are likely to pay more for their insurance cover.
This is an insurance equivalent to buying in bulk. Before the policy starts, it may be possible to negotiate with the insurance provider a longer period of cover, e.g., three years as opposed to an annual renewal. This has the potential to bring a discount of around 5-10% off the premium.
Choosing the risks you want covered
Adjusting the extent of the risks you want covered also has the ability to reduce your premiums. Some buildings’ insurance policies offer cover against vandalism, for example, but a remote cottage in the Yorkshire Dales, or a townhouse on a suburban gated estate, may be at far less risk of vandalism than other properties. Depending on where the property is, it may be fiscally prudent to exclude vandalism from the policy and reduce the cost of the premium. The same could apply to risks such as malicious damage, riot or potential impact from falling trees.
Adapting the extent of cover
The exact amount of cover you need plays a part in how much your policy will cost. It may seem obvious, but if you are insuring even a modest home, and the risks are greater say from flooding or vandalism, then your policy will cost more. Detached homes present different risks levels to semi-detached property or apartments. Insurers may want to know about how your roof is constructed, or if any part of it is flat. There may be issues with water pooling and subsequent damage, resulting in higher premiums.
The building materials used will also play a part. If your home has a thatched roof, for example, then it is more at risk of fire damage and you are more likely to pay a higher premium as a result.
Reducing the excess
Most insurance policies have an “excess” to be paid if you make a claim. The excess is the amount the person insured has to cover themselves before the policy will pay out. If the policy has an excess of £500, and a water leak causes £1,000 worth of damage, the person insured will only receive £500 from the policy because they have to bear the £500 excess charge. If, for example, the damage caused came to £400, it would not be worth claiming, although the insurance company should still be notified. Generally speaking, the higher the excess charge, the lower the premiums will be.
Buildings Insurance Group policies
People who are over the age of 50 may be able to get reduced polices through organisations such as Saga, a specialist insurer for older people. Other group policies are available, such as those for owners of historic buildings. Churches may also get lower premiums via the Ecclesiastical Insurance Group, for example.
Buildings Insurance Risk management
Insurance providers like to see homeowners implement their own risk management measures, specifically aimed at safeguarding their property. Where such measures are put in place, there could be lower premiums. These can include:
• Fire and smoke detectors
• Fire-fighting equipment such as fire extinguishers in the kitchen
• Smoke venting, so as to minimise smoke damage
• Carbon monoxide detectors
• Burglar Alarms
• Lighting protection
• Security cameras
• Secure approved locks on windows and doors
You can also make use of technology to increase the level of security. Thanks to a range of smart devices, you can keep a careful watch on your property, even if you are not there. As a general rule of thumb, the more secure your home, the lower your premium will be. This is because, the more secure your property is, the less likely it will be that you will make a claim.
Reducing the time your property is empty can lead to lower premiums. Some insurance policies require a residential property to be left empty on no more than 60 days a year.
Things buildings insurance does not cover
There are some things that buildings insurance does not cover. This includes:
• Wear and tear – damage that happens slowly over time, such as damp, rut, or condensation
• Gates and fences – storm damage to fences, gates, and hedges is not generally covered
• Insects, birds, and pests – you may not be able to make a claim for damage caused by pests or the cost to get them removed.
Making sure you don’t pay over the odds
With all those factors borne in mind, one step you can take to keep your home insurance costs as affordable as possible is to ensure you have the right amount of cover in place.
For buildings insurance, this means calculating exactly how much it would cost to rebuild your home. This can be done by using an online house rebuilding costs calculator. That way, you are not paying for more than you need to.