Building Insurance UK- Information and Insurance
Introduction to Building Insurance – building insurance in the United kingdom is available from a large variety of sources. Traditionally, homeowners purchased their home buildings insurance from either their mortgage lender or via a broker. In recent years, the Internet has become a popular medium for obtaining quotations online and there is a large variety of contracts to choose from. Although insuring your home is not a compulsory insurance by means of law, if you have borrowed money to finance the purchase of your home, then the lender will almost certainly ask you to buy an insurance policy to protect the property and have their interest duly noted. There are many varieties of building insurance contract available to purchase on the market, in simple terms though they are divided between domestic policies (for residential homes) and commercial policies( to cover shops and offices etc). There are a number of hybrid building insurance contracts to cover such things as Holiday Homes & Buy to Let Properties and Blocks of Flats.
As mentioned above, in respect of residential building insurance, up until fairly recently mortgage providers would expect you to insure the property via their block scheme, 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 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, and very recently we have seen the rise of aggregator style companies, that are able to offer a wide range of quotes online.
When it comes to choosing a home building insurance policy, the good news is , they all are fairly similar in the range of perils they will protect you against. The basic cover choices you can make are usually deciding between standard building insurance perils, which includes a limited range of accidental damage and a policy with full accidental damage cover. There are few optional extras with building insurance cover for a residential home, you may be able to add on legal expenses cover and sometimes, home emergency cover. To obtain your quotation, you will need certain underwriting information to hand, most you will already know and will be common sense, the one that sometimes need a bit of thought is the rebuilding (or reinstatement value ) of the property. This is not to be confused with the market value of the property and for most people a sum insured is mentioned in their lenders home buyer survey. If you have no mortgage on the building, you can either contact a local surveyor or use one of the many online guides to calculating your own rebuilding cost. The rebuilding cost must cover the total amount to reinstate the building including an amount for architects & surveyors fees and for site clearance.
Items included within the definition of buildings and thus which must be included in the sum insured are ; Any permanent structure used for domestic purposes within the grounds of the home including fixtures & fittings and decorations, domestic fuel tanks including gas, LPG and oil tanks, swimming pools, outbuildings, gates, hedges walls & fences, paths & drives, radio & television aerials, satellite dishes & fittings. If you have a garage or outbuilding that is located away from the main premises, you will need to mention this to the insurance company as it may not be covered automatically. The fittings at the home would include the central heating system, bathroom fixtures and fittings and a fully fitted kitchen. You are usually free to choose your own level of excess when it comes to building insurance polices although you will find that most sections of the policy document already have a compulsory excess attached. Its is important to make sure your building sum insured is accurate, to insure that your policy gives you full protection.
Building Insurance Regulatory Guidelines – anyone that sells building insurance in the UK will have to be regulated 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. You should be supplied with a number of documents: A key facts document which will provide you with a snap shot of the cover, all the salient points will be mentioned along with any significant exclusions. The policy and schedule will give you full details of your cover and tell you how to complain and make a claim. A customer charter is provided by the firm responsible for arranging the cover, this will inform you about the type of service you can expect to receive.
Who ever you decide on to arrange cover, the mortgage lender will insist on a number of provisos.
- 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 ensure 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 completion of the reinstatement works, is still a viable mortgage proposition for them.
- 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.
Building Insurance 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 public 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. Most product providers will allow you to pay by a variety of methods including direct debit.