Combined Buildings and Contents- Discounts available
Home and Contents Insurance -Buying Buildings & Contents Insurance under one policy is a great way of combining two separate sections of your home insurance together. The advantage is only one renewal date to remember and you may being be entitled to a discount off the normal separate policy price.
Introduction – making sure your Buildings and Contents are insured for the correct value is a fairly simple task, perhaps a bit tiresome but never the less, it is essential to help make sure your Home Insurance provides you with the protection you need in respect of your buildings contents & personal belongings. Regular checks should be made to make sure that your sums insured are adequate. Performing this task at the renewal date of your policy is a good idea or sooner if you are purchasing expensive items. Most policies will include a feature called “index linking” whereby your sums insured are automatically increased at renewal. Index linking is a method where home buildings and contents insurance sums insured are increased each month by a small percentage. The good news is, insurance companies do not charge for this increase until the next policy renewal date and only then if you renew the contract. The two most common indexes used are; the Building House Cost Index prepared by the Royal Institution of Chartered Surveyors in respect of building sums insured and the Household Goods section of the General Index of Retail Prices ( prepared by the National Statistic Office) in respect of contents sum insured.
Contents Insurance – most modern Contents Insurance policies are written on what is known as a new for old basis, this makes settling claims easier for the insurance company and means that you will receive funds to buy a brand new replacement item. In practice nowadays, most home insurance claims are settled directly by the insurance company who in the main prefer to replace items, rather than provide cash settlements. This type of insurance cover would seem to go against the principle of Indemnity (leaving you in the same financial position after the loss as you were before it) but is now the standard form of insurance contract available for home contents. To obtain cover on a new for old basis you have to make sure that you have insured your contents for their full replacement value. That is to say, if you had gone out and purchased them all as brand new that day. The only way to do this accurately is to go from room to room making notes as to the costs of items, remember to include everything in the home ( all the items you would take with you if you sold the home and moved out). Although, most people would leave carpets behind if they sold a property, its safest to include them in your contents sum insured as most carpet claims are met under the contents section of the policy. A little note of warning, most home insurance polices have a clause inserted called ” Average” . The Average clause allows insurance companies to reduce claim settlements if there is any element of under insurance. The amount of deduction is in direct proportion to the amount of under insurance.
Wear and Tear – if you are then unfortunate to suffer a loss and cover is confirmed under your policy, a claim will be met without deductions for wear and tear. There are some notable exceptions such as damage to clothing. To give you an example, if your Television is ten years old but you have insured it at today’s replacement cost, then it will be replaced with a new television. As mentioned above, it must be remembered that most policies will give the insurers the right to reinstate the item, they may not offer your cash, they may make use of a supplier of their own to replace the item for you. This helps keep claims costs down which of course in turn is reflected in helping to keep insurance premiums at a competitive level.
Building Insurance – you should insure your Building for it’s full rebuilding or reinstatement cost. This is not it’s market value and the amounts can differ vastly. The selling cost of your property could be considerably higher as this figure will also include amounts factored in for the price of the land based on the actual location. The rebuilding cost is only the amount to rebuild the property (don’t forget you already own the land) with an allowance for reasonable Architects & Surveyors fees, site clearance etc. If you have a mortgage on your home, you can probably discover the rebuilding cost from your survey document. Its important to get this right, if you have no mortgage, you could ask a surveyor to provide you with a rebuilding sum insured for insurance purposes or you could visit the Association of British Insurers website who have a useful online rebuilding guide which is suitable for a broad range of properties.
When should I insure my Building?- this question often causes a great deal of confusion amongst prospective policyholders. The purchaser of a building becomes responsible to insure the property after the exchange of contracts (in Scotland after the seller has agreed to accept the offer). If you purchase a building at a property auction, you may find yourself responsible to insure the building from the moment the hammer falls and the property becomes yours. Some auction houses are able to offer a 28 day temporary cover and if buying by this method, you should enquire about insurance before you proceed. Some people decide to wait until the actual completion date but this is incorrect. At the exchange date of the contract you are responsible to pay the full purchase price of the property even if in between dates the property burns down. In practice, most completion dates are within a month but sometimes they can be longer and during the winter months especially in the UK, you may find the property suffers storm damage or worse. If you are selling a property, although the purchaser should insure the property as mentioned above from the exchange date, often they forget and thus it is prudent to keep the property insured until such time as you move out of the home.
A number of building insurance polices now include a contracting purchasers extension which will grant the same cover to the incoming purchaser as is afforded to yourself. Obviously, if the person has covered themselves, then this extension will not apply. In the event of a claim occurring between the exchange date and the completion dates, both insurance companies will need to be informed of the loss and they will communicate with each other to decide the question of liability.
Most lenders will now allow you to arrange your own building insurance policy thus enabling you to shop around for the best deal, they will need their interest noted on the schedule of insurance to satisfy the Contract Rights Act. This act states that for anyone to receive a benefit from an insurance policy, their interest needs to be noted on the schedule of insurance. They will want to see a copy of the policy document and usually will make a request that the actual insurer signs a declaration confirming that the cover meets the minimum requirements as laid out in the council of mortgage lenders handbook. Proof of cover in almost all cases has to be with the lender prior to funds being released, leaving it to the last minute may lead to delays.
We have mentioned above the contract rights act and mortgage lenders but this equally applies to individuals that have interests in buildings. If you are responsible for the insurance of a block of flats for example, you should make sure that the insurance company has also made a note of the other flat owners interests as well. Sometimes and for convenience, an endorsement can be added that will cover all the flat owners interests.
Contact Assetsure if you require a UK Buildings Insurance Quote.