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Thu, 08/08/2019
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What Is The Difference Between Buildings And Contents Insurance?

Moving to a new house is a daunting but a rewarding rite of passage, especially if you are buying your first home. Your house is unique to you in many ways, including the fact that it holds most, if not all, of your valuable and personal possessions.

It is important to protect the building and contents of your home with adequate insurance. The two types of home insurance are Buildings and Contents cover. In this article, we will explore what each of these offers and why they are so important to have.

What is buildings insurance?

Buildings insurance provides cover for all of the permanent fixtures in and around your home, including the physical structure of the building itself.  This means everything that makes up the construction of the building is covered by buildings insurance – e.g.  Your roof, windows, garage, shed, and your bath and toilet.

The buildings insurance policy should cover the total cost to rebuild your home from scratch. . The insurer will ask you to provide them with this figure before you take out your buildings insurance cover. It is essential that you get an accurate estimate of this cost; some people may get their house surveyed by professionals.

Is buildings insurance a legal requirement?

Buildings insurance isn’t a legal requirement, but if you are taking out a mortgage on a property most mortgage providers will recommend that you take out a policy as a prerequisite to receiving your loan. From a mortgage providers point of view they consider their investment to be safer should any damage occur to the property.  .

Higher risk properties

It is important to remember that there are certain locations which are at higher risk of damage, e.g.  buildings near rivers that flood.

A typical buildings insurance policy may not cover your home with this increased risk, so you may have to take out specialist cover. It is crucial that you discuss with your insurer what their policy covers and in what circumstance they will pay out for a claim, before you purchase a policy.

What is contents insurance?

Buildings insurance covers the actual building of your home and your Contents insurance covers items like carpets, curtains, electrical equipment, furniture, garden furniture, tools and your personal possessions, anything that can be removed from the home.   

Contents cover is calculated by the amount it would cost to replace your possessions, ‘new for old'.  

Contents insurance isn’t a legal requirement, and is not required if you are taking out a mortgage. It is, however, very important to ensure that your belongings are covered in the event of theft or accidental damage.

Valuable items

If you have a number of valuable items such as jewellery, paintings or other expensive possessions in the property you should check with your insurer if these items can be covered under your household policy or if you need to cover the items on a separate policy.   

Do you need both types of insurance?

As neither of these policies are required legally, whether you are a home owner or not, you can purchase one without the other. There are, however, a few things to point out between what is covered by Buildings insurance and what is covered by Contents insurance. e.g. A fitted kitchen or bathroom suite is covered by Buildings insurance, but your carpets are covered by Contents insurance.

Whether you buy both policies together in a package and pay one premium or you buy two separate policies, the price you pay can vary, so always shop around to get the cover you need at a price you can afford.  Remember, always check the small print in the policy so that you know exactly what your cover includes.

Other types of home insurance

These policy types are for individuals who have a particular need due to the property they are living in or own:

  • Listed Buildings Insurance: This is a specialised policy for houses that are listed by local authorities as being places of historic or cultural importance. It would cost more to repair these homes, so they need a policy to reflect this cost.
  • Landlords Insurance: This policy is for those who are renting out their property. As there will be someone other than the homeowner living in the house, a typical policy will not cover any damaged caused.

  • Non-Standard Home Insurance: This policy is for those individuals who are   building their own house, or have renovated an existing home with some non-standard building materials or are using a non-standard construction methods. Using uncommon materials or methods will make the house more expensive to repair, which a typical policy will not cover.

Although these differing policy types may not be commonplace, they are a few examples of the different types of insurance cover. Home insurance policies are crucial in ensuring that your belongings and your home are protected in the unfortunate event that they are stolen or damaged.

To find the best price for your home insurance policies, it is essential that you shop around, and the Be Wiser website is a fantastic place to start.