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Building and Content Insurance -
Whilst it is not mandatory to have buildings insurance in place, if your property is mortgaged, the lender will insist that you have a buildings policy in place on your property before they will allow completion. Those fortunate enough not to have a mortgage would be wise to think twice if choosing not to have a policy in place as recent freak weather conditions have proved that unfortunate incidents can happen to anyone.
If you live in a leasehold flat, the buildings insurance will more than likely be arranged by the managing company on your behalf and the premium included as part of the annual Ground Rent / Maintenance Charge. It is worth checking this out if purchasing a leasehold flat as arranging buildings cover on a single flat can prove difficult.
The difficulty in arranging buildings cover on a single flat is establishing responsibility in the event of a claim. There is also the question over whose insurance covers the communal areas. As these are grey areas less and less insurers will insure single leasehold flats.
Buildings insurance is calculated using the re-build cost of the property not the market value. These figure can vary significantly depending upon many factors including the type and size of property and it’s location. Generally the rebuild cost is lower although in some cases it is not unheard of for it to be higher.
Rebuild costs can be difficult to calculate and the easiest way of establishing what your rebuild cost is, is to look at your latest valuation report. The rebuild costs will be detailed separately on the report. If you don’t have a recent valuation report there are websites you can use with online calculators useful as a guide although they will only work on standard properties.
Some insurance policies are offered on a block basis where the rebuild cost is set to a maximum ceiling i.e. £500,000. This negates the need to know the exact rebuild cost as long as it is below the maximum ceiling. These are good if you want to ensure that you are adequately covered however they tend to be higher in price and therefore you are probably paying for cover that you don’t need.
Buildings cover generally includes the building, roof, fences and permanent fixtures damaged by fire, theft and burst pipes. All policies differ and what is covered under one policy may not be covered under another. When shopping around for a policy, have an idea in your mind of the cover you require and read the policy documents to ensure that you are getting the cover you want. Some companies offer cheap policies which initially may seem like a bonus but be sure to read the policy details as you may end up not covered for even the most basic things.
Contents insurance covers possessions in both home and garden and would cover theft, fire and accidental damage. Some policies include accidental damage as standard, some as an additional extra and some not at all so it is worth checking your policy to see which one applies to you.
Many companies cover will be the item’s cost less wear and tear but on the market are policies that will cover ‘new for old’.
The cost would be in accordance with how much the homeowner considers the replacement cost to be. Nowadays many companies have set amounts and policyholders just declare items over a certain figure.
Excesses also vary from policy to policy. Standard excess are between £100 and £250 although some offer a Nil excess for a higher premium and some offer a bigger excess for which the premium will be lower. For subsidence claims a £1,000 access is likely to be required.
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