What is buildings insurance?

Buildings insurance is designed to provide financial protection if there’s damage to the structure of your home, such as the walls, roof and floors. It usually covers damage to fixtures and fittings too.

If you own your own home, you’ll need to have buildings cover just in case your home is damaged and needs a repair.

It’s not compulsory, but it’s usually a condition of your mortgage.

If you own your own home, with or without a mortgage, it’s important that this insurance is a top priority.

You don’t need to take out buildings insurance if you’re renting a property. This is because it will be your landlord’s responsibility to make sure the right cover is in place.

If you’re a tenant, you might want to take out a contents insurance policy to insure your belongings.

Exactly what events and issues you’re covered for will vary between different policies and insurers. But most policies will allow you to claim if your home is damaged by:

• vandalism
• subsidence
• falling trees
• fire, smoke, explosions
• car and lorry collisions
• water damage from leaking pipes
• oil leaking from your heating system
• natural events, such as storms and floods.

Some policies will also cover other structures around the home, such as garages, outside walls and driveways.

There are two types – sum insured and bedroom rated.

This is where the amount your policy covers you for is based on the estimated cost of rebuilding your home from scratch. It’s not the same as your home’s market value, which might be higher or lower.

The cost of rebuilding your home will increase over the years, so index-linked policies are best. This is because they update the sum insured to reflect the changing cost of rebuilding.

While this type of buildings insurance can be hard to calculate, it means you only pay for the cover you need.

This is where the amount your policy covers you for is based on the number of bedrooms you have.

This typically gives you a very high sum insured to protect you against under-insurance. It also means you won’t need to work out the cost of rebuilding your home.

However, there is a risk that you end up paying for more cover than you need. 

• Index-linked cover – will the amount of cover increase to meet the increasing cost of building materials?
• Unlimited sum insured – with a lot of insurers, and especially when buying online, the sum insured is set very high and your premiums will be fixed. This means you won’t be able to reduce the sum insured to get a cheaper premium.
• Alternative accommodation – will the insurance pay for you to live somewhere else if you can’t live in your house after it’s damaged?
• Excess – how much will you need to pay yourself if you make a claim?
• Escape of water – are you covered for damage from burst pipes or water tanks?
• Accidental damage – does your policy cover you for unintentional incidents that harm the structure of your home, such as smashed windows, damage to kitchen units and holes made in walls? This is usually bought as an add-on.
• Home Emergency Service – some policies include cover for heating and plumbing repairs along with other home emergencies as part of their standard policy. For others, it’s an optional extra. It’s best to shop around, as policies vary widely.
• No-claims discount – will you pay less on your premiums if you’ve gone for a while without making a claim?

• Comparison websites – these are a good way to find cheap insurance that fits your needs. But be aware that the cheapest policy isn’t necessarily the best for you. Find out more about how to buy insurance using comparison sites.
• Direct from insurers – not all insurers are covered by comparison sites. For example, Aviva, Zurich and Direct Line are among the big names that don’t appear – their products can only be bought directly.
• Insurance brokers – they can help you get the most suitable home insurance for your circumstances, particularly if you have complicated needs. For example, if you’re a landlord insuring several properties. See our guide on when to use an insurance broker. 

Make sure you answer truthfully and accurately when your insurance company asks if there’s anything unusual about your home. If you miss something important, a future claim could be rejected.

Insurers are adding more and more exclusions to their policies. So it’s important to make sure you read the small print carefully, including the main features and benefits information. If you see something you don’t understand, ask the insurer or an insurance broker.

This ensures you have enough cover, particularly if you’ve made improvements to your home. If you add a conservatory or an extension, for example, your property will cost more to rebuild. 

The cheapest deal isn’t necessarily the best. Make sure you get the right policy, even if it costs a few pounds more. Otherwise, you might not be able to claim when you really need to. This means being as accurate as you can when valuing your home. Underinsuring your home could be a very costly mistake if you have to claim. 

It’s a competitive market with a lot of different policies available. Using comparison websites to shop around will give you a better chance of securing a good deal. It’s worth doing this when your policy comes up for renewal each year. This is because simply allowing your insurer to automatically renew your policy could mean you end up paying more than you need to. 

You can ask your insurer to cancel your policy at any time, but there are a few things to be aware of:  

• if you have a mortgage, your lender usually requires you to have buildings cover in place 

• you won’t earn the current year’s no-claims bonus if you cancel midway through 

• you’ll usually have to pay a cancellation charge, unless you’re at renewal.  

If you’ve paid upfront and haven’t made a claim, you’ll receive a refund for the remaining months – minus any cancellation fees.