Building Insurances

Buildings insurance

This is often a condition of the lender giving you a mortgage so, in the event of a disaster, it can be repaired or rebuilt. If you donít have buildings insurance and your house burns down, the lender will have no collateral for its loan, so will call it in.

In which case, not only will you be homeless, but youíll still owe the lender the value of the mortgage. Because so many lenders have suffered this, they now insist you provide proof the property is insured.

The lender will ask you to cover the property for the rebuild cost, which should be noted in the survey.

In most areas of the country this will be considerably less than the market value of the property. Most insurers cover you for the rebuild cost, although some will cover you for the market value. Check which one your policy will pay out on.

What it covers

As a matter of course, most buildings insurance policies cover the fabric of the building, including built-in kitchen units and bathroom suites, outbuildings, including sheds and garages, and any walls, gates or fences.

These tend to be covered against damage or destruction caused by fire, storms, theft, vandalism, escaped water, flooding and subsidence.

Accidental damages

Some also offer accidental damage as standard, but in most cases you will have to pay extra for this cover.

This is the element that covers damage caused by, for example, drilling through a pipe. So if you plan to do any DIY on the property, it's well worth considering.

The cost of adding on this type of cover will vary, as will the cost of the basic policy, as insurers base their premium calculations on a number of factors.

How much it costs

The main factors are the age of the property, postcode, age of policyholder, number of bedrooms and type of property. Generally, the cheapest type of property to insure is a semi-detached house.

When you sign up for a mortgage the lender will ask you if you want to sign up for its buildings and contents cover. This is unlikely to be the cheapest cover.