Buildings insurance covers the cost of rebuilding your home if it's damaged or destroyed. It's usually compulsory if you're planning to buy your home with a mortgage and you may not be able to get one unless you take out buildings insurance.
This page tells you what you can expect buildings insurance to cover and what you should think about when you choose a policy.
What is buildings insurance
Buildings insurance covers the cost of repairing damage to the structure of your property. Garages, sheds and fences are also covered, as well as the cost of replacing items such as pipes, cables and drains.
Your insurance should cover the full cost of rebuilding your house. This also includes the costs of demolition, site clearance, and architects' fees.
Buildings insurance usually covers loss or damage caused by:
- fire, explosion, storms, floods, earthquakes
- theft, attempted theft and vandalism
- frozen and burst pipes
- fallen trees, lampposts, aerials or satellite dishes
- vehicle or aircraft collisions.
Do you need buildings insurance?
If you have a mortgage
Buildings insurance will be a condition of the mortgage and must be at least enough to cover the outstanding mortgage. Your lender should give you a choice of insurer or allow you to choose one yourself. They can reject your choice of insurer but can't make you use their own insurance policy unless your mortgage package includes insurance.
If you buy a house you should take out buildings insurance when you exchange contracts. If you sell a house you are responsible for looking after it until the sale is completed so you should keep your insurance cover until then.
If your mortgage lender repossess your home you're responsible for insuring it until it is sold and you should tell your insurer that you are no longer living there, otherwise you may not be covered.
If you don't have a mortgage
Buildings insurance isn't usually compulsory but it is advisable. Think about how you would afford to rebuild your house if it were damaged or destroyed. Owners of tenement flats are required to have buildings insurance.
If you're a tenant
Your landlord usually takes out the insurance, although you may be responsible for loss or damage to fixtures and fittings. Your household contents insurance may cover this.
How much buildings insurance cover do you need?
It's important to make sure you insure yourself for the amount it would cost to completely rebuild your home. This is called the sum insured. The cost of rebuilding your home is not the same as the price you paid for your home, or its current value if you were to sell it. Rebuild costs are usually less than the current market value, so make sure you don't over or under insure yourself.
To help you work out the cost of rebuilding your home, there's a Building Cost Information Service online calculator on the Association of British Insurers' website.
Some insurers offer unlimited cover so you don't have to work out the rebuild costs. However, if already know what they are, it may be cheaper to shop around for a policy that fits your exact needs.
Some policies work out the sum insured based on a general assessment of where you live and the type and age of your home. However, this may not fit your particular property, so you'll need work out whether you've got enough cover.
You should regularly review the amount your buildings insurance cover as rebuild costs tend to rise over time. Some insurers offer policies that will increase the sum insured automatically in line with rebuild costs.
Remember, if you improve your home, such as adding an extension or a loft conversion, the rebuild costs may also increase and you will need to make sure you're covered.
If your property has special features, for example a thatched roof, or it's a listed building, you can pay for a survey from the Royal Institute of Chartered Surveyors to assess the rebuild costs.
Do you need extra buildings insurance?
You might want to consider taking out extra buildings insurance to cover for you for other risks. You'll have to pay higher premiums for this cover. You can add on extra insurance for:
- flooding or subsidence if you live in a high risk area
- accidental damage to your home
- alternative accommodation if you have to move out of your home after you've made a claim
- damage to boundary walls, fences, gates, driveways and swimming pools
- damage to underground pipes, cables, gas and electricity supplies
- glass in windows, doors, conservatories and skylights
- liability cover if someone else's property is also damaged
- legal expenses cover
Other useful information
- The Association of British Insurers (ABI) has guidance on rebuilding costs at: www.abi.bcis.co.uk
- Royal Institute of Chartered Surveyors RICS
- Shelter Scotland has information on insurance for flat owners at scotland.shelter.org.uk.