Introduction -
building
insurance in the United kingdom is available from a large variety of sources.
Although is not a compulsory insurance by means of law, if you have borrowed
money to finance the purchase of the property, then the lender will almost
certainly ask you to buy an insurance policy to protect their interest.
Nowadays, most building societies and lenders will allow you to insure the
building with a company of your choice (they may expect you to pay a small fee
if you do not accept their own insurance but this is usually a one off) and thus
you are free to choose from a wide range of building insurance product
providers. You can approach an insurance company direct for a
building insurance uk quotation or
as has been the preferred option for many years, contact an insurance broker who
will have access to a large number of insurance schemes. In recent years "
Direct" Insurance companies have become very popular in the United Kingdom for
providing home insurance polices covering buildings, it is only in recent times
that a few have started to offer commercial building insurance contracts,
however, the general view now is that despite their clever marketing, you are
likely to get a better deal by approaching a middleman, a broker that
specialises in property insurance covers.
Regulatory Guidelines -
anyone that sells building insurance
in the Uk will have to be registered by the Financial Services authority or be
an authorised representative of a firm that are directly authorised. Strict
guidelines are laid down by the FSA to make sure that customers interests are
protected at all times. Clarity is expected in all dealings relating to building
insurance and documentation should be provided to you by the product provider to
help you make an informed choice as to the suitability of an insurance contract.
Who ever you decide on, the mortgage lender will insist on a number of provisos.
1- To satisfy the contract rights
act 1999, the lenders interest must be noted on the schedule of insurance, this
will allow them in the event of a serious claim to make sure their interest as
providers of a mortgage on the building is protected. In essence, if the
building is flooded or burned down, they will want to make sure that the
insurance company reinstates the building in the correct manner and that the
building after completing of the reinstatement works, is still a viable mortgage
proposition for them.
2- Secondly, they will want to make sure that any building insurance policy you
buy, satisfies the council for mortgage lenders handbook conditions. The Council
of Mortgage Lenders (CML) currently consist of 163 members and 101 associates.
The members are made up of banks, building societies and other mortgage lenders.
If you borrow money from anyone to finance property purchase, you can almost
guarantee that they will be a member of the council of mortgage lenders.
Associates come from a variety of related businesses that have an interest in
the mortgage market.
Policy Standards -
The good news is that almost all
insurance policies for buildings satisfy the conditions of the lenders handbook,
providing they are issued in respect of buildings occupied as a private dwelling
house. A policy will cover the bricks and mortar of the property against a wide
range of perils such as fire, lightning, explosion, earthquake, storm, tempest,
flood, subsidence, landslip, heave, burst pipe, theft, attempted theft, riot,
civil commotion, property owners liability, impact and a number of other perils.
A popular addition to a building insurance policy is Accidental damage and
whilst this will extend the number of eventualities for which you can claim, it
must be remembered that a building insurance policy will not cover you against
everything that can go wrong at the home, building insurance policies provide
cover for sudden and unforeseen events such as storms or floods. They are not
contracts of maintenance and if anything wears out or simply needs updating at
your home as a result of wear and rear or old age, then that is down to you as
part of a regular house maintenance plan.
Claims -
also it is worth remembering that if
you are unlucky enough to have a claim at your home, then it is always the
resulting damage that is covered by a building insurance policy, repairs to the
item that caused the damage are seldom covered. Thus if you radiator fractures
and damages the walls and a door of the building, they the repair or replacement
work to the walls is covered but the repair to the fracture in the central
heating is not. With Commercial insurance you have to be a little bit more
careful, always study the insurance requirements of the mortgage lender against
the insurance policy you have been offered. Sometimes commercial building
insurance wordings are a little more restrictive and some of the covers,
particularly subsidence can come as a optional extra. Also when insuring a
building many brokers and insurers refer to the term " All Risks" cover and this
can be misleading, at least half a dozen Uk Commercial building insurers issue
All Risks policies where you have to select subsidence cover as an optional
extra.
Applying for a UK Quotation - when
applying for your insurance quotation, you will need to be in possession of
certain information, probably the most important is the rebuilding cost of the
property, this is the actual amount of money that would be required to rebuild
the property in the event of a total loss, it must include an amount for
architects and surveyors fees, site clearance etc. This causes much confusion
amongst homeowners as often, its the value of the property that policyholders
use as the building sum insured. This amount mostly has no relation to the
rebuilding cost, as you already own the land on which the property sits, this
amount does not need to be factored in the costs. It almost all cases, the
rebuilding cost of the property is less that its resale value. However, this
rule of thumb should be applied with caution as many older properties,
especially listed buildings or buildings constructed of non standard techniques,
can often be very costly to rebuild. Insurers definition of standard
constriction does vary but usually if your property is built of bricks or stone
and has a pitched roof of slate or tiles it is deemed to be of standard
construction. Most insures are prepared to accept a building with a certain
proportion of roof being flat ( felt on timer is typical) but buildings that are
entirely flat roofed may attract a higher insurance premium.
Copyright Assetsure Limited 2007
