Some mortgage lenders require you to sort out building insurance before they will lend to you. So, if you’re considering taking out a mortgage, it’s a good idea to factor in building insurance costs when drawing up your budget.
Here, we explain how insurance providers calculate your building insurance premium, and share some tips for how to save on your next quote.
Need a reminder of what building insurance does and doesn’t cover? Wondering, what is the average cost of building insurance? Scroll on.
Reminder: What does building insurance cover?
Building insurance (also known as buildings insurance) is a type of insurance policy that covers the permanent structure of your home. This includes the walls, floors, windows, doors, ceilings, and roof, along with fixtures and fittings such as your kitchen and bathroom.
Although it’s not a legal requirement to have building insurance, if you own your home, it could end up saving you a fortune if your property is ever damaged and requires extensive repairs (or a complete rebuild).
So, what sort of damage does building insurance cover? While policies vary from one provider to the next, you’ll typically be protected against the following:
- Extreme weather events, like storms or flooding
- Fire and smoke damage
- Subsidence (where the ground under your property starts sinking, causing the foundations to become unbalanced)
- Explosions
- Vandalism
- Damage from falling trees
- Vehicle collisions
- Water damage from leaking pipes
- Oil leaking from your heating system
Note: If you’re renting your property, it’s your landlord’s responsibility to arrange landlord buildings insurance. You just need to consider contents insurance to protect your belongings.
What isn’t covered?
Generally speaking, wear and tear, leaky gutters, pest infestations, and frost damage aren’t usually covered by standard building insurance. Most building insurance providers will include a list of exclusions in the policy, so it’s always worth double-checking to make sure you have the level of protection your property requires.
It’s also worth noting that you might not be able to claim for loss or damage if it happens while you’ve left your home unattended for a certain length of time (usually more than 30 or 60 days, depending on the provider).
If you plan on leaving your home alone for an extended period, you might want to add unoccupied house insurance to your home insurance policy.
How much does building insurance cost on average?
The average cost of building insurance in the UK is around £170 a year, but you may have to pay more (or less) than this depending on the size, type, age, and location of your property.
How to calculate buildings insurance cover
When calculating your building insurance premium, providers will consider your home’s rebuild value (which is how much it would cost to rebuild if it were completely destroyed).
This isn’t the same as the market value of your home. In fact, it’s usually lower. However, it does need to include the cost of labour and materials to tear it down and build it again.
According to Checkatrade, the average cost to rebuild a three-bed house in the UK is around £198,000.
It’s vital that the rebuild cost is estimated accurately. If it’s underestimated (or you don’t inform your insurer about an extension or other alterations), your insurance might not cover the full cost, and you could be left out of pocket.
There are a variety of factors that providers will consider when calculating your rebuild cost. Here are some of the questions they might ask. Understanding the reasons behind each is helpful for comparing quotes.
- How old is the property? The age of your property will almost certainly affect the rebuild cost. New-build properties may be more affordable to rebuild, due to the availability of modern building materials. On the other hand, older properties can be more expensive to repair or rebuild if they were built using specialist materials or include unique period features.
- How big is the property? In general, the bigger the property, the more expensive it will be to rebuild. The number of storeys and number of bedrooms and bathrooms will be factored into the cost.
- What type of property? Whether your property is detached, semi-detached, or terraced will also impact the rebuild cost.
- Which building materials were used? If your home was built using unusual materials (timber, glass, or cob, for instance) it might be more challenging — and therefore more expensive — to source and replace them.
- Is it a listed building? Rebuilding a listed building in the event of serious damage can be very expensive. This is because listed buildings will often require specialist materials and expert labourers, and all building work needs to be approved by planning authorities and heritage officers.
- Is there a flood risk? If your property is in an area of the country prone to flooding, it will be deemed high risk and cost more to insure.
- Are there any extra features/alterations? Adding additional features to your home, such as an extension, conservatory, swimming pool, or solar panels, can increase the cost of rebuilding it.
What else can affect building insurance costs?
The cost of your building insurance premium can also be affected by optional add-ons or extras that you choose to include in your policy.
For example, you might want to add alternative accommodation cover, which provides financial assistance if you need to live somewhere else while your property is being repaired or rebuilt.
Other optional extras include:
- Accidental damage cover: Damage to furniture, fixtures, fittings, and windows isn’t always covered when it happens by accident.
- Cover for damage due to burst pipes or water tanks: Check your policy covers damage due to the escape of water.
- Home emergency cover: If something sudden happens and causes a loss of essential services, like heating or power breakdown, home emergency cover will pay to fix the emergency issue and ensure it doesn’t get worse.
- Legal services cover: You may want to have legal costs covered, in case you need to take legal action against the person or company responsible for the damage to your property.
- Index-linked cover: It’s a good idea to buy a building insurance policy that covers the likely increased cost of building materials over time.
You should also be aware that opting for a lower excess (the amount you need to pay towards the repairs when you make a claim) can increase your premiums.
Is building insurance paid monthly or yearly?
You can choose to pay building insurance either monthly or yearly — both options are available. As with most insurance products, covering this cost annually tends to be cheaper than paying monthly. But that’s not the only way you can save money on your building insurance premiums.
Ways to cut the cost of your building insurance
There are several ways to help reduce the cost of your building insurance policy:
- Combine with contents insurance: If you choose to bundle up your buildings and contents insurance into one home insurance policy, you might get a discount on the overall cost. Plus, it can make it easier to claim for something that has affected both the structure and your belongings (for example, in the event of a flood).
- Don’t auto-renew: If you let your current deal expire, your provider will probably automatically renew your building insurance at a higher price. Make sure you keep an eye on your renewal date and shop around for the best deals.
- No-claims discounts. Look for discounts for not making a claim — they could save you money on your premiums in the future.
Save on building insurance costs with Howden
When it comes to your home, we understand that you’ll want peace of mind that you’re covered should the worst happen. This can only come from a buildings insurance policy crafted to cater to your specific requirements. Learn more about Howden’s buildings insurance here.
Or, if you require contents insurance in addition to building protection, a combined home insurance policy may be more suitable. Get a quote today.
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