The amount of cover that you need will be the amount required to re-build your home in the event of it burning down or collapsing. This is the ‘sum insured’ and is the maximum payout possible under your buildings insurance. You can find the re-build value of your home on your valuation report, mortgage agreement or the deeds to your home.
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NB: It is very important that you give the full re-building value on your application to the insurance company. If you do not then making a claim in the event your home has to be completely re-built home might be impossible.
Buildings insurance should also cover you, as the owner of the property, for a certain amount of liability (normally up to £1 million) for accidents that happen to others while in your home - or that you cause outside it. This is called ‘public liability’ insurance.
Your buildings insurance may cover you for emergency repairs where you have to call a tradesman out to prevent any damage from getting worse. You can also extend your buildings insurance cover to allow for Alternative Accommodation in the event your home becomes uninhabitable. This will pay for a reasonable standard of accommodation (up to a given limit) while your home is repaired. It is also well worth making sure that your policy covers accidental damage to underground pipes and cables and also to glass (skylights, doors and windows).
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Although mortgage lenders require you to have buildings insurance – and normally have an arrangement with an insurer to try and sell you a policy – you do not have to buy your insurance through them. Unless you have a special mortgage deal that includes buildings insurance, you are free to shop around. However, your mortgage company will want to check your policy over, and may well charge you a fee (£25 perhaps) to do this. This means that, if you are going to shop around, then you need to make sure the deal you get is quite a lot better than your lender’s offer, or the cover available is more generous.
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