Building and contents insurance explained
What is buildings and contents insurance?
Buildings and contents insurance is placed under the bracket of home insurance. It is a combined insurance that will cover or replace any damage that might occur to the house or its contents, including loss. It is essential for all mortgaged houses, and the majority of other homeowners who do not have a mortgage will also have this type of insurance. It is possible to get the two insurances separately, although you will find that most providers offer them as a combined cover.
- Buildings insurance – This insurance covers your house in case of a disaster where your house is so badly damaged that it needs to be completely rebuilt. The event which caused the damage must have been completely beyond your control, for example storm or flood damage, a major fire, smoke or explosions, water leakage/burst pipes, subsidence, or third party vandalism or damage etc. Mortgage providers will insist that you take out this cover, as it means they will be able to recover their losses in such events. It is like a type of security or collateral for the loan that they have given to you.
- Contents insurance – This covers all items in your house which are not fixed to the property, for example your furniture, jewellery, appliances and clothing. Most of the available contents insurance policies will even cover things like the contents of your refrigerator and freezer! The cheapest type is indemnity insurance. This cover will replace exactly what was there before, so if you claim for a washing machine that was already three years old, you will be given a replacement washing machine that is three years old. The more expensive "new for old" option will give you a brand new replacement of whatever gets damaged or stolen, thus you would get a brand new washing machine. Contents insurance will cover you in most of the same situations as buildings insurance, but also includes theft. Again, any of these perils must have been beyond your control.
Why do I need this type of insurance?
Some mortgage suppliers will make this type of insurance compulsory when you take out a mortgage with them, to cover their loan. Otherwise, this insurance is highly recommended to protect you against unforeseen circumstances. Virtually every home in the country will have this type of insurance just for that reason, and it could end up proving to be very costly if you do not take the cover out.
What gets covered by this insurance?
There are different types of cover which you can take out with these insurances, and this will dictate what gets covered by the policy.
This will mean that you get an automatic payout if any damage occurs to your home, or automatic replacement of any of your furniture etc. The cost of the damage will not be
a factor that is taken into consideration, and all payouts will be made. However, the type of damage that occurs to your house will greatly affect whether or not you receive a payout. Most buildings and contents insurance policies will only cover the following events:
- Storm or flood Fire Lightning or explosion Falling trees or branches Subsidence, drag or landslip Breakage of glass or sanitary fittings Damage from escaped water or oil Shock caused to the house by animals, vehicles or aircraft
With buildings insurance, most structural fixtures within your house/property will be covered, ensuring they will be repaired if necessary, or rebuilt if they are beyond repair. These include:
- The structure of your house, e.g. walls, ceilings and the roof Gates, fences, hedges and footpaths that all lie within the boundaries of your property Permanent fixtures and fittings within the house, such as the kitchen, any fitted wardrobes Decoration within your house, for example wallpaper and paint Pipes and cables
With contents insurance, standard cover will only apply to certain items in your house. Typical types of insurance offered are:
- Money within your house, up to Ј500 Losses on stolen credit cards, up to Ј500 Office equipment kept in the house, up to Ј5,000 Having new locks fitted if these are broken or damaged, or if keys are lost Replacement mirrors or glass broken by accident or through vandalism, full cost covered Damage or theft of deeds and other documents within the house, up to Ј250 Loss of metered water, up to Ј1,000 Damage or theft of satellite equipment, up to Ј500 Contents of your freezer, up to Ј500
Optional extras that you can add to your cover
As well as the most basic cover, there are a number of optional extras, available for an additional price:
- Accidental building damage – This includes damage which you cause to the house, for example whilst doing DIY. Accidental contents damage – If you cause damage to any of the contents of your house by accident. Personal belongings – This will cover personal belongings, such as iPods, computers etc, regardless of whether they are stolen or damaged in the house. Home emergency – If an emergency, such as a burst pipe, occurs within the house, this type of cover will provide you with a tradesman that you can call out for free. It is usually 24 hour cover, and will generally only cover you for a certain amount of work, on average up to Ј250 (including call-out charge, materials and labour). Legal expenses - Some buildings and contents insurance will also cover you if an accident occurs within your house or on your property, and another person is hurt. This legal liability, although rarely needed, could cover you in situations where people will sue if the accident was caused by something or someone within the house.