Buildings & Contents Insurance Guide

Understanding How to Protect Your Home and Possessions

Buying a home is likely to be one of the largest financial commitments you make.

You may spend months saving a deposit, arranging a mortgage, viewing properties, negotiating an offer and progressing through the legal process.

But there is another important consideration:

What happens if the property or the things inside it are damaged, destroyed or stolen?

Buildings and contents insurance are designed to address different parts of that risk.

Buildings insurance protects the physical property against specified insured events.

Contents insurance protects many of the possessions inside it.

Although they are frequently purchased together, they are not the same insurance.

What Is Buildings Insurance?

Buildings insurance is designed to cover the physical structure of your home against specified insured events.

Depending on the policy, this can include:

• walls;

• roof;

• floors;

• ceilings;

• windows;

• permanent fixtures;

• fitted kitchens;

• fitted bathrooms;

• garages; and

• certain outbuildings.

Definitions differ between insurers, so the policy wording determines precisely what forms part of the insured building.

What Does Buildings Insurance Protect Against?

The insured events depend on the policy.

Depending on the cover selected, this could include events such as:

• fire;

• flood;

• storm;

• escape of water;

• theft or attempted theft;

• vandalism;

• subsidence;

• impact damage; and

• other specified risks.

Not every event is covered automatically.

The policy wording, exclusions and conditions determine whether a particular claim is eligible.

What Is Contents Insurance?

Contents insurance is designed to protect possessions within your home against specified insured events.

Think about what is inside an average home:

• furniture;

• televisions;

• computers;

• clothing;

• kitchen equipment;

• appliances;

• jewellery;

• personal belongings; and

• many other possessions.

Replacing everything following a major event could cost considerably more than expected.

Contents insurance is designed to help protect against that financial risk, subject to the policy terms.

Buildings vs Contents Insurance

A simple way to understand the difference is to imagine turning the house upside down.

Many of the things that would remain attached to the property would broadly fall within the buildings side.

Many of the things that would fall out would broadly be considered contents.

This is only a simplified illustration, however.

There can be grey areas, and insurers define buildings and contents within their own policy wording.

Do I Need Both?

If you own and occupy your home, you may want both.

Buildings insurance protects the property itself.

Contents insurance protects your possessions.

A major event such as a fire could potentially damage both simultaneously.

Having buildings insurance without contents insurance could leave you responsible for replacing your possessions.

Having contents insurance without appropriate buildings insurance would not protect the structure of a property you own.

Is Buildings Insurance Required for a Mortgage?

If you are buying with a mortgage, the lender will generally require the property securing the mortgage to have appropriate buildings insurance.

The property is the lender's security for the money being borrowed.

If it were severely damaged or destroyed, that security could be affected.

The precise requirements should be checked against the mortgage conditions and purchase circumstances.

When Should Buildings Insurance Start When Buying a House?

This is an important question because responsibility for the property can arise before you physically move in.

The appropriate point at which insurance should begin can depend on the transaction and legal arrangements.

Your solicitor or conveyancer should confirm when you become responsible for insuring the property.

Do not automatically wait until completion day or moving day without checking.

Do I Need Contents Insurance for a Mortgage?

Contents insurance serves a different purpose from buildings insurance.

It protects your possessions rather than the lender's security over the building.

Even where it is not a mortgage requirement, it may still be important for your own financial protection.

Ask yourself how much it would cost to replace the contents of your home following a major insured event.

The total can be surprisingly high.

What Is Rebuild Cost?

One of the most common misunderstandings with buildings insurance is the difference between market value and rebuilding cost.

They are not the same thing.

Market value represents what the property may sell for.

Rebuild cost concerns the cost associated with rebuilding the insured property according to the basis used by the policy.

The land itself is also one reason these figures can be very different.

Don't Simply Insure the Building for Its Purchase Price

Imagine buying a house for a particular market price.

That figure reflects much more than the bricks and roof.

It can include:

• location;

• land value;

• local demand;

• school catchments;

• transport connections; and

• market conditions.

The amount relevant to buildings insurance should therefore be established according to the insurer's requirements rather than simply copying the purchase price.

What Is Contents Value?

When arranging contents insurance, you may need to consider how much it would cost to replace the possessions in your home.

People can underestimate this because they think about their most expensive items individually rather than the entire household.

Consider:

• beds;

• sofas;

• wardrobes;

• televisions;

• computers;

• kitchen equipment;

• clothes;

• shoes;

• children's belongings;

• furniture;

• appliances;

• jewellery; and

• other personal possessions.

The combined replacement cost can be substantial.

What Is Underinsurance?

Underinsurance occurs when the cover arranged is insufficient for the value or risk being insured.

This can create problems when a claim occurs.

The consequences depend on the policy terms and circumstances.

Accurate information should therefore be provided when arranging insurance, and cover should be reviewed as circumstances change.

High-Value Items

Contents policies commonly contain limits relating to valuable items.

You may need to pay particular attention to possessions such as:

• jewellery;

• watches;

• artwork;

• specialist equipment;

• collections; or

• other high-value belongings.

A policy might have an overall valuables limit and/or a limit applying to an individual item.

Some possessions may need to be specifically declared.

Personal Possessions Outside the Home

Standard contents insurance does not necessarily mean all of your belongings are insured wherever you take them.

Some policies offer additional personal possessions cover for eligible items taken away from the property.

This can be particularly relevant for belongings you regularly carry outside the home.

Terms, geographical limits and exclusions vary.

Accidental Damage to Buildings

Accidental damage can provide additional protection for certain unexpected and unintended damage to the building.

The precise definition and scope vary.

It should not be confused with deterioration, poor maintenance or general wear and tear.

Check whether buildings accidental damage is included automatically or needs to be selected separately.

Accidental Damage to Contents

Contents accidental damage can potentially protect against certain unintended damage to possessions.

Again, the scope depends on the policy.

A standard contents policy should not automatically be assumed to include comprehensive accidental damage protection.

Escape of Water

Water damage can cause significant damage to both buildings and possessions.

Policies may provide protection for specified escape-of-water events, subject to their conditions and exclusions.

The policy may distinguish between the resulting insured damage and the cost of repairing the source of the problem.

Understanding the wording is therefore important.

Flood and Storm Damage

Buildings insurance can provide cover for specified flood and storm damage.

However, insurers assess property risks differently, and policy terms can vary according to location and circumstances.

The existence of insurance does not remove the need to maintain the property appropriately.

Subsidence

Subsidence can be a significant concern for homeowners and mortgage lenders.

Buildings policies may provide cover for specified subsidence-related damage, subject to policy terms, exclusions and excesses.

Previous subsidence history or known structural problems should be disclosed accurately when required.

Alternative Accommodation

If an insured event makes your home uninhabitable, some policies can provide cover towards eligible alternative accommodation.

This can be extremely important following substantial damage.

The amount, duration and circumstances covered depend on the policy.

Trace and Access

Some policies may provide cover relating to locating the source of certain problems, such as an escape of water, and gaining access to it.

This can be important because finding a concealed leak may involve opening floors or walls.

The extent of this protection varies, so the policy wording should be checked.

Matching Sets and Suites

Damage to one part of a matching set can create a practical problem.

For example, one damaged item may no longer match the undamaged items around it.

Policies can differ in how they approach matching items, suites, bathroom fittings, kitchen units and similar circumstances.

This can be worth examining when comparing cover.

What Is an Insurance Excess?

The excess is the amount you may have to contribute towards an eligible claim.

Different excesses can apply to different types of claim.

For example, the excess applicable to one insured event may differ from another.

A policy with a lower premium but substantially higher excesses is not necessarily cheaper when viewed from the perspective of an actual claim.

What Isn't Buildings and Contents Insurance Designed to Cover?

Home insurance is not a maintenance contract.

Policies generally contain exclusions and limitations relating to circumstances such as:

• gradual deterioration;

• wear and tear;

• lack of maintenance;

• deliberate damage;

• certain pre-existing problems; and

• other excluded events.

Exact exclusions vary between policies.

Maintaining the property remains the homeowner's responsibility.

Empty and Unoccupied Properties

A property that remains unoccupied for an extended period can present a different insurance risk.

This could happen:

• between exchange and moving in;

• during extensive renovations;

• following a tenant leaving;

• during an extended trip; or

• while a property is being sold.

Policies can impose additional restrictions once a property has been unoccupied for a specified period.

Check the policy and inform the insurer where required.

Renovating Your Home

Planning an extension or major renovation?

Your existing insurance should be reviewed before significant work begins.

Building work can alter:

• the value of the property;

• rebuilding requirements;

• security;

• occupancy;

• structural risk; and

• other aspects of the insurance.

Do not assume a standard home policy automatically provides appropriate protection for major building works.

Working From Home

Working from home has become increasingly common.

Occasional office work from home may be treated differently from operating a business involving:

• customers visiting;

• stock;

• specialist equipment;

• employees; or

• other commercial activities.

If your use of the property changes, check whether the insurer needs to know.

Buildings Insurance for Leasehold Properties

If you are purchasing a leasehold property, the buildings insurance arrangements can differ from buying a freehold house.

For example, buildings insurance may sometimes be arranged collectively by a freeholder or managing agent.

The lease and legal documentation should establish the relevant arrangements.

Your solicitor or conveyancer can confirm what applies to the property you are purchasing.

Do not purchase duplicate buildings cover without first understanding the existing arrangements.

Contents Insurance for Leasehold Properties

Even where buildings insurance is arranged under a block policy, that does not necessarily protect your personal possessions.

A leaseholder may therefore still need to consider their own contents insurance.

Again, the distinction between protecting the structure and protecting your belongings is important.

Buildings Insurance for Landlords

A standard owner-occupied home insurance policy may not be suitable for a property that is rented to tenants.

Landlords should consider insurance designed for the way the property is actually used.

Landlord insurance may include buildings cover alongside other landlord-specific options.

What Happens if You Start Letting Your Home?

If a property originally insured as your home is subsequently rented out, the risk and use of the property have changed.

Do not assume the existing home insurance remains suitable.

The insurer should be informed where required, and appropriate landlord insurance may need to be considered.

Home Security

Insurers may ask questions about security features such as:

• locks;

• alarms;

• doors;

• windows; and

• other protective measures.

Some policies can contain specific security conditions.

Information should be accurate.

If a policy is offered on the basis that particular security exists, those requirements should be understood and complied with.

Making a Claim

If something happens that may result in a claim, contact the insurer according to the policy's claims procedure.

Depending on the circumstances, it can be useful to retain:

• photographs;

• receipts;

• valuations;

• ownership evidence;

• police reference information where applicable; and

• other supporting documentation.

Follow the insurer's instructions and avoid unnecessary disposal or repair of damaged items before understanding what evidence may be required, unless immediate action is necessary to prevent further damage or protect safety.

Don't Choose Home Insurance on Price Alone

Home insurance can sometimes appear relatively straightforward on a comparison screen.

But the detail matters.

Compare:

• buildings cover;

• contents cover;

• valuables limits;

• individual item limits;

• accidental damage;

• excesses;

• alternative accommodation;

• personal possessions;

• legal expenses;

• home emergency options;

• exclusions; and

• policy conditions.

A policy should be judged on whether it provides appropriate cover for your circumstances, not simply whether it produces the lowest annual premium.

Review Your Buildings and Contents Insurance

Your home does not remain exactly the same forever.

Reviewing your insurance can be particularly important after:

• moving home;

• an extension;

• renovation;

• purchasing expensive possessions;

• major changes to contents;

• starting to work from home;

• changing how the property is occupied; or

• beginning to let the property.

Your insurance should continue to reflect the property and possessions you actually have.

Buildings & Contents Insurance Checklist

Before arranging cover, ask:

Do I own or rent the property?

Is the property freehold or leasehold?

Who is responsible for buildings insurance?

When do I become responsible for insuring a property I am buying?

Is the buildings cover appropriate for the property?

What would it cost to replace my household contents?

Do I own valuable items that need to be specified?

Do I need personal possessions cover away from home?

Is accidental damage included?

What excesses apply?

What alternative accommodation cover is provided?

Are there security requirements?

Will the property ever be left unoccupied?

Am I planning renovations or building work?

What are the important exclusions?

These questions provide a much better basis for choosing home insurance than price alone.

Speak to Cambs Ely Mortgages About Buildings & Contents Insurance

Arranging the mortgage is only part of protecting your home.

Appropriate buildings and contents insurance can help protect both the property itself and the possessions you have built up inside it.

For people purchasing a home, we can consider General Insurance alongside the mortgage and wider protection conversation, helping you understand the different risks that may need to be addressed.

Cambs Ely Mortgages provides mortgage and protection advice to first-time buyers, home movers, homeowners and families in Ely, Cambridge, Cambridgeshire, East Anglia and across England, with remote appointments available.

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Important Information

This guide is intended for general educational purposes and does not constitute personalised insurance, financial, legal or tax advice.

Buildings and contents insurance policies vary between providers. Cover, sums insured, excesses, exclusions, eligibility, insured events and policy conditions depend on the insurer, product, property and individual circumstances.

Always check the policy documentation carefully to understand what is and is not covered.

If you are purchasing a property, your solicitor or conveyancer should confirm when responsibility for insuring the property passes to you.

Your property may be repossessed if you do not keep up repayments on your mortgage.