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If you need buildings insurance, read our guide for tips on getting the right cover for the right price.
Having buildings and content insurance is essential if you want to keep your property protected and mortgage lender happy. So, how do you get yourself the very best deals?
If you’ve got a mortgage (or if you are taking one out) to buy a house, your mortgage provider will insist that you have buildings insurance. That’s insurance for the actual building, not what’s inside it – although you may choose to add contents insurance as well, for your own peace of mind.
Why is this so important? It easy to see why if we give you this example. Imagine you’ve just bought a house and you’ve used a mortgage to buy it. Then there’s a fire and the property is destroyed. If you didn’t have home insurance, how would you pay to have the home rebuilt? If this happened, and you didn’t have home insurance, you’d be left paying a mortgage on a property you no longer have. And, chances are, you’d have to pay out for another property to live in too, either rented or your own, so that would be another expense to find money for. Could you pay a mortgage and rent somewhere to live?
Thankfully, mortgage lenders won’t even entertain the idea of you purchasing a property using a mortgage without having home insurance in place, so you’d never end up in this scenario. But if you did, you can see how difficult, and expensive, it would make your life. Even if you’re lucky enough to not need a mortgage, you should always consider home insurance as being essential.
If you are renting then your landlord will insure the building itself, but you may still want to buy contents insurance (some landlords even try to insist their tenants buy it).
Right, now we’ve made it clear why you need buildings insurance, we’ll move on to getting you the best deals.
Tip 1 – Don’t over/underestimate what your property is worth
This is one of the main mistakes most people make when they’re taking out buildings insurance, overestimating the value of your home. You see, what you should be doing is estimating the value of the cost of rebuilding your home, but what most people do is give the value of their home according to the market, which is usually higher. You may be wondering why this is. Well, it’s because when your properties market value is calculated it’ll include a number of factors that the rebuild cost doesn’t, such as the land your home sits on, the local school catchment areas, transport links and the general desirability of the area your property is in. If it’s a highly desirable area, the market price will increase, but the rebuild costs will stay the same.
The best way to get an accurate figure for the re-build cost of your home is to get a survey done. The surveyor will prepare a quote for what it would cost to have your home professionally rebuilt. You can get a survey done for about £250, by a local surveyor, which may seem like a lot of money, but if you underestimate the cost of rebuilding your home and the worst happens – it’s totally destroyed in a fire – you would be left to pay the extra amount needed to complete the build, which could run into thousands of pounds.
Another, less expensive, way of calculating the rebuild cost of your home is to use the Association of British Insurers calculator. But this isn’t a one size fits all calculator, there’s no provision for the rebuilding of historic or listed buildings and there’s nothing on the rebuilding of non-brick built properties either. And, if your home is a flat or maisonette, you’ll really have to leave the rebuild estimation to the professionals. As long as your property doesn’t fit into one of those categories, you’re good to go.
You’ll need a few measurements to use the calculator, so grab your tape measure, go outside and measure the square meter size of your property. You’ll need the length and width of the property and then you just multiply those together to get the square footage. If your upstairs is the same as the downstairs, you simply double the figure you’ve just calculated. Otherwise you’ll have to work out the upstairs area as well, then add it to the amount you’ve calculated for the downstairs.
Once you have the rebuild cost, it’ll only change significantly if you make significant changes to your property, like adding an extension which will change the square footage or converting the loft or basement into another room.
So overestimating will mean you pay more for your cover than you need to, and underestimating means you could end up with huge costs if your insurance doesn’t cover what it takes to rebuild. But, more importantly than that, you could be breaking the terms of your mortgage, which would be a disaster.
Tip 2 – Use a specialist
For those people that we excluded in the point above – flats, maisonettes, historic and listed buildings, as well as those with unusual features, such as thatched roofs, streams running through the property, it’s located near to water or has trees growing nearby – get yourself a specialist broker. There are insurers who are willing to take on out of the ordinary homes, so shop around to get yourself the very best deals. You’ll probably also need a specialist broker if you’ve ever had any signs of subsidence in the building or other major repair works needed, such as underpinning or other structural support work done for significant cracks.
Tip 3 – Don’t allow your premium to automatically renew
This advice is true for most of your insurance products, but is not less important here. Why? Because most insurers will save their best deals for the newest customers. While those that have been loyal for years find themselves with the not so great renewal amounts. This is not always the case though, so don’t assume it is. If you do find yourself being presented with a renewal amount that you think is more than you’ll pay elsewhere, get like-for-like quotes and use them as a haggling tool, if you want to stay with your current provider.
Tip 4 – Price comparison sites
Using price comparison sites is one of the easiest ways of seeing what’s on offer quickly. But, there are some things you need to keep in mind. Firstly, what is presented to you on the list of quotes is not what you’ll necessarily be charged when you go to the insurer’s website and fill in your details. Remember, price comparison sites assume a number of things and you may find that when you input accurate details the price you are quoted is different to what you saw originally.
Tip 5 – Choose your excess
As with car insurance, you will usually be offered a set compulsory excess, but then be able to as a voluntary excess to this. You can’t choose how much you’re compulsory excess is, but you can choose how much your voluntary excess is. And, the higher you make your voluntary excess, the lower the price of your premium becomes. But, be careful not to make the excess so high that you’ll struggle to pay it if you do need to claim.
However, after a quick check, changing the voluntary excess to the maximum allowed on price comparison site USwitch shows the maximum amount to be £1,000. So, if anything were to happen and you needed to make a claim, you’d have to pay the first £1,000. However, changing the value of the voluntary excess from the highest to zero, only changed the cheapest premiums cost by £20 annually. This being the case, you’d have to seriously wonder whether it’s worth it, as £20 per year extra seems a small amount to pay if it means you don’t have to stump up £1000 for a claim.
Tip 6 – Pay annually
If you can, you should really try to pay annually for your policy. This is because when you pay monthly the insurance company will usually be, in effect, ‘lending’ you the money to pay for the policy in one lump sum, which you then repay each month (which is why they sometimes credit check you when you apply for insurance). So not only are you paying interest (which may be hidden as it us just expressed as a higher monthly premium) when you pay monthly, there may also be extra admin charges added by the insurer.
In fact if you have access to a low interest or interest free credit card for purchases, it can even be cheaper to buy the annual insurance on the card and repay it as quickly as you can, rather than paying the higher monthly premium. It is worth getting the calculator out and working out what’s cheapest for you.
So there you have it, six tips to help you get the best buildings cover for your buck. If you want to learn all about how to get the best contents cover for your belongings, read our blog How to spot a great contents insurance policy.
by Shelley BowersBack to blog home