Anyone with a mortgage will know the importance attached to protecting probably your largest single investment – home buildings insurance will have been a condition of the mortgage being advanced in the first place.
Indeed, the protection of the physical fabric and structure of the property will have been so important that most banks and building societies will themselves offer to arrange your home buildings insurance. Whilst this might appear a convenience, you will almost invariably end up paying more for the insurance cover from this source (since the lender will also have taken some commission from the sale of the insurance).
Apart from the opportunity to earn commission on the sale of the insurance, another reason for the bank or building society’s interest is because of the relatively difficulty in calculating what sum needs to be insured. Basically, this needs to be the cost of rebuilding the home following its total destruction. Depending on the location, age and state of the market, the cost of such rebuilding can be more or it can be less than an estate agent’s valuation or the actual market value of the property. Naturally, the rebuilding cost – or the sum insured – is likely to rise in line with inflation, so most insurance companies will automatically increase the sum insured in line with the retail price index and vary the premiums accordingly.
The risks covered by home buildings insurance generally include the major hazards to the structure of the property such as fire, flood and subsidence, together with accidental damage to buried cables and pipes, glazed windows and doors and bathroom fittings. If the property is located in an area known to be prone to subsidence, however, the premiums are likely to be loaded accordingly.
As with most types of insurance, of course, the terms and conditions of home buildings insurance also varies from insurer to insurer. Some policies, for example, will also cover accidents that arise during do it yourself home improvements – others will not. Clearly, it is as well to know exactly what the policy covers before attempting such works.
When selecting the home buildings insurance that best suits your needs, it is also a good idea to enquire about any contents insurance also offered by the same insurance company since there will frequently be discounts for purchasing the two insurance packages together.
Given the variations between different products and the benefits in passing up your mortgage lender’s offer to arrange the insurance for you, it can be somewhat daunting to arrange your own home buildings insurance directly with the provider. This is an area, therefore, in which the specialist expertise and knowledge of the market possessed by an insurance broker is certainly likely to help. A specialist broker will be able to gather from you details about the property – its location, age, size, and type – and form an accurate picture of the type of home buildings insurance you need. Married to his knowledge of the insurance market and the many products available, the broker will then be able to point you in the direction of the most appropriate and cost effective cover. |
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