Introduction – it is possible to obtain a combined home insurance UK 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 sum insured 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 literally 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 pick 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 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.
For a Home Insurance Quote contact Assetsure. We are able to offer insurance for a wide range of UK property types including nonstandard construction