How much buildings insurance do I need?
The level of insurance you arrange should be enough to cover the total rebuilding of the premises. However, the rebuilding cost of a building is not the same as its market value. Depending upon the type of property, the rebuilding cost could be more or less than the property valuation were it for sale.
You can find out the value from a recent mortgage survey, or by paying a surveyor to carry out a rebuilding estimate survey. If your property is very valuable or is a listed building, it is certainly worth obtaining a professional valuation first.
Most insurance companies ‘index link’ the level of their cover year on year. This means that the amount of cover offered by the policy will keep up with inflation, although premiums also tend to go up annually.
It is wise to fully review your policy every two or three years to ensure that the cover remains adequate for your needs.
Do I have to take out buildings insurance with my mortgage lender?
Most lenders make it a requirement of your mortgage advance that you take out a buildings insurance policy to protect your property from damage, and many will offer their own policy at the time you take out the mortgage.
However, there is no guarantee that your mortgage lender will offer the most comprehensive policy, so you should always consider finding an alternative.
Differences between policies include:
• Accidental damage. This may simply cover broken door glass or extend to damage to all the fixtures and fittings in your home
• The policy excess. This is where you agree to be responsible for the initial part of any claim for damage. The more you agree to be responsible for, the lower your insurance premium is likely to be
• The provision of a 24-hour helpline
• Discounts on paying an annual premium rather than a monthly one
• Discounts for those over 50
• Many, but not all, buildings insurance policies are combined with contents insurance
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