What is buildings insurance and what does it cover?

Buildings insurance protects homeowners from costly repairs if their property suffers any damage.

We’ll cover how buildings insurance works, when you can make a claim, how much it costs and the different types available. 

What does building insurance cover? 

Buildings insurance covers the cost of repairs to the structure of your property and, depending on the policy, some permanent fixtures too.  

The policies differ, but broadly, buildings insurance will cover loss and damage to your property caused by: 

• Natural disasters including floods and storms 
• Fires 
• Vandalism 
• Lightning strikes 
• Falling objects (such as trees) 
• Vehicles colliding with the property 
• Subsidence (the ground beneath the property sinking) 
• Burst pipes 

Permanent fixtures often covered by buildings insurance include the roof, walls, ceilings, fitted bathrooms and kitchens, floors, doors and windows. 

Buildings insurance will not cover damage to items inside your home. 

To protect those, you’ll need contents insurance, which often allows you to claim after loss or damage to items in your home or following a burglary. 

Buildings insurance does not cover general wear and tear to your property, damage caused by insects and pests or conditions such as damp and rust. 

Do you need buildings insurance when you buy your own home? 

Buildings insurance is the responsibility of the homeowner, but it is not a legal requirement. 

If you buy a property with a mortgage, most lenders will require you to take out buildings insurance.

You can buy buildings insurance in advance and set the date the policy starts for the date you exchange contracts. 

If you are purchasing a property without a mortgage, the decision is up to you, but it’s worth considering the potential costs if anything happens to your home.  

However, there are some exceptions where a homeowner may not need buildings insurance.  

For example, if you own a property in a block of flats, you may not need your own insurance policy, as the block is covered as a whole, and the leaseholders pay a service charge instead. 

If you’re a tenant, it’s your landlord’s responsibility to ensure the property is insured. Tenants may, however, want to take out contents insurance. 

How much does buildings insurance cost? 

The cost of buildings insurance varies depending on the property, but the average cost in the UK is £108.33 per year, according to Confused.com. 

Generally, the riskier your property looks to an insurer, the more your insurance will cost.

For instance, older properties built between 1850 and 1940 tend to be more expensive to insure due to issues associated with age.  

Sometimes you can make a saving with a combined buildings and contents insurance policy. 

What are the different types of buildings insurance?

There are two main categories of buildings insurance, which are ‘sum insured’ and ‘bedroom rated.’ 

Sum insurance

Sum insurance is calculated based on the projected cost of rebuilding your home from scratch. 

This takes into account the cost of materials and labour but does not reflect the market value of your property. 

As the cost of rebuilding your property will change over time, it’s a good idea to review and renew your sum-insured policy often. 

Bedroom rated insurance 

Bedroom rated insurance is calculated based on the number of bedrooms your property has.  

It provides high levels of cover. Although it reduces the risk of being underinsured, it can mean some homeowners end up overpaying for levels of cover they don’t need. 

How do you get buildings insurance? 

You don’t have to get buildings insurance from your mortgage provider, and you can use market comparison sites to shop around for the best policy. 

Give yourself plenty of time to compare different quotes before deciding on your insurer. 

When a chartered surveyor does a homebuyer survey, they can also carry out a rebuild estimate for the property, which you can use as a guide for your policy. 

Remember, buildings insurance covers the cost of a rebuild, not the property’s market value. 

If you’re shopping around for buildings insurance, consider the following: 

• Having building work done before you move in? Tell your insurer first, as this can impact your policy. Don’t forget to renew your policy after future renovations. 
• How much is the excess? This is how much you have to pay towards any claim. 
• Does the policy include arranging alternative accommodation if your property requires extensive work? 

Market comparison sites can be helpful, but a financial adviser can give you bespoke advice.

An expert could help you find buildings insurance that gives you all the cover that your property needs. 

Can you get buildings insurance before an exchange?

If you’ve not yet exchanged on your property, you should purchase buildings insurance in advance.  

You shouldn’t wait until you move in.

If you have no insurance and something happens between exchanging and moving into your new property, you’ll have to pick up the bill. 

What about buildings insurance for new builds?

Buildings insurance for a new-build or off-plan property is slightly different, as these properties are usually sold with a warranty. 

But you still need buildings insurance as the warranty your new-build property comes with won’t offer the same protections. 

Warranties on new builds usually cover specific repairs for defects and structural issues for a pre-determined number of years.  

Buildings insurance offers homeowners protection for their property, but policies can vary.

Discuss your options with a financial expert through Unbiased.

Learn more: Do I need mortgage life insurance?