Introduction - it is possible to obtain a
Combined Home Buildings & Contents Policy for your Home or sometimes the policies are
purchased from different sources as it is more economical to do so. There is
sometimes confusion as to what constitutes Buildings and what is Contents and
many people worry that they will not be correctly insured. Providing your sums
insured are adequate and you have a combined policy or two separate contracts,
you shouldn’t really need to worry though. By reading the following notes , we
hope that you will find it easier to know what is the appropriate section to
insure under.
Home Buildings Insurance -
buildings are defined as the structure of the home itself, the walls doors,
roof, plumbing, wiring, insulation and any permanent fixtures & fittings. By
permanent fixtures and fittings, we mean fitted bathrooms or kitchen units.
Just imagine being able to tip your home upside down, if it doesn’t fall out
then it is part of the building. The general rule to follow is, if you were to
move out of the property, anything that you would leave behind is classed as
Buildings. One grey area relates to fitted carpets, are they Contents or
Buildings, generally they are treated as Contents but it is always best to
check. The definition of Buildings also extends to include
outbuildings, garages, greenhouses, sheds, patios, walls, drives, fences, gates
etc. However you may find that cover on some items, such as fences and gates may
be restricted.
If you have obtained a
mortgage on your property, your lender should have given
you a suminsured in your survey report. Frequently the amount requested is
higher than the actual true rebuilding cost, As insurance at the requested
amount is a requirement of your mortgage loan, the fact that it is incorrect is
academic and you should insure for the stated sum to avoid being in breech of
your policy conditions. If you do not have a mortgage on your property,
you will be required to calculate your own insurable sum and we are unable to
offer assistance in this matter suffice to say that the Association of British
Insurers produce an excellent guide to rebuilding costs based on the property size. You can view this guide located in their consumer zone by clicking
here. It is essential that you insure your building for the correct amount
as failure to do so will almost certainly result in the imposition of an average
clause following a claim at the property.
The average clause has the effect of reducing a claim in direct proportion to
the amount of under insurance. If the difference between the incorrect sum
insured and the true sum insured is large, this can have a devastating effect on
a claim. If you are in any doubt as to the true rebuilding cost of your property
or you are unhappy with using the calculators on the association of British
Insurers web site, you should seek a professional opinion
Contents
Cover -
contents includes just about everything in the home (and your garage or
outbuildings) belonging to you or a member of your family. Some policies are now
extended to give a small amount of cover for your guest’s effects as well. Your
policy cover will also include cover for items that you do not own but you are
responsible for (a rented television set for example). Examples of your
Contents are; Furniture, furnishings, moveable fixtures& fittings, electrical
equipment, your clothing. Special Light fittings that you would perhaps take
with you on leaving the building should also be insured as Contents. Food, Drink
and Money (up to certain limits are also classed as contents. Any fitted
furniture, such as built in wardrobes or a fully fitted kitchen should be
insured as Buildings. It is advisable though to insure fully fitted carpets as
contents as this seems to be insurers accepted practice. You contents policy may
provide you with Theft cover for items in your garage, garden or outbuilding but
you should check this matter before accepting cover.
An extension to a Contents Policy is known as All Risks; we must be careful with
this expressions as it does not literarily mean cover against any risks but is
an extended form of cover which is designed to cover higher risk items that you
may take out of the home. Included in the cover is Accidental Loss, this type
of cover is excellent for insuring such items as watched, jewellery, camera
equipment, personal effects or sometimes even sports equipment. Because of the
nature of the cover and it’s cost it is typical to by the cover either on a
specified basis ( your are charged per item you want to insure) or on a first
loss basis where you pich a sum insured ( say up to £5000) where the insurers
will not want details of the items covered, however they may specify a single
article limit ( say a £1000 per article). This Unspecified basis is a good
choice if you have lots of lower value items that you take out of the house on
a regular basis.
Buildings and Tax Issues
- Assetsure are able to offer insurance quotations for buildings that are
unoccupied that have been purchased for renovation purposes. At the end of the
renovation, we will then offer a standard buildings insurance quotation on either
a homeowners or a let property basis. Many people are now deciding not to
purchase old property to renovate but are acquiring land and building their own
properties. One of the many advantages of building your own home or indeed
holiday home is that all of the building work is free of value added tax. At the
present rate of taxation, this will save you 17.5 %. In all probability, you want
do the building work your self, many people are competent enough for the small
jobs and resort to a bona fida contractor to handle the majority of the works.
If you are using a contractor and they are registered for VAT, make sure that
all of their invoices are zero rated. Also. any purchased invoices should also
be zero rated.
If you do decide to be the project manager, you will have to pay VAT on
materials but remember to keep all of the invoices as you will be able to
reclaim the VAT by contacting the revenue and VAT Office. They have
produced a very useful leaflet which we can obtain free of charge, called VAT
notice 719. The issue of VAT on new build homes is an important one and you could
end up saving a fair amount of money. Of course there are a few
considerations
-
The government will only allow you to claim back VAT if the property is a
new building and was not constructed for any business activities.
-
The property must have been constructed with the intention of your living
in the dwelling, it must not have been built for letting purposes for
example.
-
You must be able to produce receipts for any amounts you want to claim
back.
-
If you are using the services of a builder, the correct method is not to
pay the VAT on the labour and building materials at source. If you have a
dispute over this with your builder, please contact your local VAT office.
-
You will be unable to reclaim VAT on any professional services such as architects
or surveyors.
-
You cannot reclaim the VAT element of equipment hire, however, if the
equipment comes with a driver for example, the situation may be different.
-
You are allowed only to make one claim and it must be within 3 months of
the works end.
Some people though, still favour renovating older property, that perhaps has
more character and this scenario is also pretty much free of VAT. VAT registered
builders must charge a reduced rate of 5% on the supply of labour and
materials which again you can reclaim when the project is completed. There are
more rules and regulations regarding unoccupancy of the property but generally
speaking anything that has been unoccupied for in excess of three years will be
able to receive the benefit. There are also tax breaks for the owners of
listed buildings. Work can be
zero rated but you have to make sure that any work carried out has been approved
and the necessary planning consents carried out. The work has to be
classed as listed building consent and cannot be just general maintenance.
The VAT notice building & construction 708 deals with this. It certainly pays to obtain any of the above mentioned leaflets, if you are planning
to renovate a property, you may find that the tax man is prepared to give you a
little assistance.
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Copyright Assetsure Limited
2007
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