Wednesday, May 8, 2013

How much building insurance is necessary? (Featured Guest Post)

If you have recently become the owner of a property, or particularly are thinking of buying a home for the first time, you may be looking into the subject of building insurance and struggling to know what is required.

Why insure at all?

Unlike some other forms of insurance, buildings cover is not a mandatory legal requirement in the UK. You may be forgiven for thinking that this means you need not bother with it at all, but many mortgage lenders deem it a necessary part of any application Aside from the technicalities involved with borrowing against the value of your investment, the security that comes from knowing that you are protected in the event of fire or flood damage, repairs after an intrusion, or even rioting is not to be underestimated. Once you have made the decision to take out a policy though, you may be having trouble working out exactly how much building insurance you require. With so many varying levels available, perhaps it is wise to clarify first of all what the term itself means.

Defining the terms

Building insurance comes under the umbrella term of home insurance, which is split into the two sections of 'contents' and 'building'. 'Contents' of course refers to the possessions you keep within your property, and you may already be familiar with this if you have decided to insure your belongings while living in a rented property. Determining the value of these objects can be tricky, particularly if you have had some of them for many years and are unsure of the current going rate to buy a replacement. However building insurance is a different matter, as the valuation that is relevant to your policy is not the market value of your property, but how much it would cost to rebuild it in the event of it being seriously damaged or destroyed.

How can I find out the value of my property?

Most people are not qualified to assess the total value of the materials and labour required to build a home at a glance (or even after close inspection), so don't worry if you are unclear at first about how much your property is worth for the purposes of building insurance. The information that you require can be easily obtained from a surveyors report undertaken prior to the keys being handed over, but if you have any issues with the information detailed in the buyers report it may be wise to commission your own independent survey. For a quick estimate, try searching for online calculators that can give you an immediate ballpark figure.

Other factors to consider

It is important not to get caught out by taking out a policy that undervalues your home in any regard. If you are living in a period property or one with specialist features, you will need to consult someone familiar with the methods and materials needed to restore it to its original condition so that the full cost is factored in. Likewise, if you undertake improvements or extensions to your property, remember to look for a new quote that takes the value added to your home into account.

 Disclaimer: This is a featured guest post.

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