Do I Need Buildings Insurance?
There are many different types of insurance policies available for a range of different purposes covering buildings and properties. However, it is not uncommon for the responsible parties, be they a landlord, homeowner or tenant to be unsure as to whether or not they need to take out buildings insurance or whether it is the responsibility of another. Buildings cover in an essential insurance policy which needs to be taken out in cases of mortgages and second mortgages.
With regards to buildings insurance, as with any policy, you should strongly consider what the policy’s cover includes and excludes; which type of buildings cover is actually required for your property and if there are any additional risk factors to account for such as flooding or other additional risks.
What is Buildings Insurance?
Buildings insurance falls under the general insurance ‘umbrella’ of home and property insurance. This involves two categories of insurance that are quite different from each other:
Contents Insurance – This is for items and possessions inside your home that you keep, such as TVs, personal belongings, furniture, jewellery, as well as some higher value kinds of flooring such as carpets; up to a maximum value, beyond which point you are likely to need specific insurance products and policies.
Buildings Insurance – This provides you with cover for the actual building and structure; this type of insurance also covers ‘fixtures and fittings, including ceilings, doors and windows, fitted kitchens, walls, roof, built-in cupboards, bathroom suites and more. It can also include garages and sheds, but it is worth verifying with your insurance provider, to ensure that you are sufficiently covered.
What is Covered Under a Building’s Insurance Policy?
In a typical building’s insurance policy, you will often be covered for the full cost of repairs (or in the event that a rebuild is needed) as a result of things such as:
- If a vehicle collides with the building
- Freezing of the plumbing [causing damage to pipes and plumbing systems]
- Fire damage
- Damage due to a storm
- Lightning strikes
- Explosions (such as gas)
- Oil leaking from your heating system
- Flooding damage
- Water damage due to pipes leaking
- Bursting of plumbing systems causing flooding
What Does Buildings Insurance Not Cover?
Whilst buildings insurance does cover you for a lot of potential risks and damages, it will generally not cover you for damages and breakages that fall under the category of general wear and tear. This may include:
- Damage due to frost (unless it causes damage from a burst pipe)
- Damage caused by leaking fascias soffits and gutters
- Certain damages caused by pests (for example rats, squirrels, birds and insects)
- Damage incurred whilst the property has been left vacant for a period of between 30 and 60 days: some insurers will be able to include this in your policy provided that you arrange cover with them and let them know in advance
Check the Terms of Your Insurance Policy
To verify exactly what is and is not included in your policy, make sure that you have fully read and understood the terms and conditions of the insurance cover you are intending to take out, so you don’t encounter nasty and potentially costly surprises in the future. Your Insurance provider or broker will likely be able to provide you with the necessary details.
You should also ensure to always provide full disclosure to your insurers if you are aware of any underlying or outstanding issues with the building in question.
Failure to do so to the best of your knowledge, may otherwise end up invalidating your policy. Hence, if you need to claim at a later date, your claim will be rejected, leaving you to have to cover the costs yourself. Consequently, before you decide to build an extension or decide to knock walls down, tell your insurer as soon as possible.
Is Buildings Insurance a Necessity?
There are circumstances where buildings cover is absolutely necessary for property owners and leaseholders and in these circumstances, a policy needs to be taken out to, for example, acquire a mortgage or build a property.
When Do I Not Need Buildings Insurance?
If you are a tenant, it is not your responsibility to have buildings insurance in place, rather, it is your landlord’s. Nevertheless, you may want to consider taking out home contents insurance cover to ensure your prized possessions are covered in the event of damage being caused to them as this is almost never covered by the landlord.
Do I Need Buildings Insurance for a Mortgage?
Almost all mortgage lenders will require you to take out buildings insurance as part of the conditions of the mortgage contract and it will usually need to be at least enough to cover any outstanding damage on the property. Generally speaking, your insurer will allow you to either choose the buildings insurance cover yourself or they will give you a range of suitable insurance products to choose from.
Whilst it is possible for the insurer to reject a provider you have suggested, it is much less likely for them to force you to use their own insurance policy, unless it is the case that the mortgage package selected includes insurance.
In the event of repossession, you are reminded that it is still your responsibility to have buildings insurance until the property’s purchase is completed. You should however, also inform your insurer that you are no longer an occupant there, or you may invalidate your insurance cover altogether.
If You Don’t Have a Mortgage
In this scenario, it is not compulsory for you to have a buildings insurance policy.
When you buy a house, it is advisable to take out buildings insurance at the point at which you exchange contracts. If you are in the middle of the process of selling a property, you should keep in mind that you are still the homeowner, and therefore responsible for having buildings insurance until the sale is completed.
If You are a Landlord Renting Out a Property
If you are a buy-to-let homeowner or landlord, you will need to have a buildings insurance policy cover in place to ensure that your tenants are covered.
It is one of your responsibilities as a landlord to make sure this kind of cover has been implemented and is properly underwritten. In practice this means that as the owner of any property, you need to take care of the buildings cover for the property. The tenants however will usually be liable for their own content insurance policies.
Insurance for Leaseholders
It may be the case that your lease explicitly states that you are responsible, as the leaseholder for the necessary buildings insurance with a named insurer. However, this is often arranged by the freeholder.
This will usually be the case in blocks of flats where the freeholder is the party owning the freehold and the land of the block. Leaseholders and individual apartment owners are the party which is likely to be responsible for the buildings insurance policy if not covered by the freeholder