Types of buildings insurance

There are two main categories of buildings insurance, insurance calculated by the number of bedrooms in your property and insurance calculated by the sum insured, where you are required to calculate the cost of rebuilding your home yourself. The choice between the two often comes down to the difference between cost and convenience. Calculating sum insured insurance may be a long and sometimes confusing process, however you ensure that you only pay for the cover you need. Bedroom-rated insurance on the other hand may be convenient, and you don’t need to worry about not being adequately covered however, you may end up paying unnecessarily for cover you don’t need.

Bedroom-Rated Buildings Insurance

“Bedroom-rated” policies are, as the name implies, based on the number of bedrooms within your house.

  • A higher the number of bedrooms makes the premium that you pay more expensive regardless of their size or content.
  • Most policies have an unlimited sum per room, so if the most expensive bedroom in the house gets destroyed you won’t only be entitled to the average cost of a room.
  • Be careful to check your policy to make sure that this is the case.

While this may save time and effort it may be worthwhile to consider…

Sum Insured Buildings Insurance

The “sum insured” is the cost of rebuilding your house no matter what the eventuality – even if the entire thing is washed away.

  • The sum insured may be either above or below the current value of the property; the market value of your home will have little to no effect on the sum insured.
  • It is important that it is calculated properly,
    • A chartered surveyor can calculate the cost of rebuilding for you.
    • It is possible to calculate this value yourself although it is not recommended unless you have a very good knowledge of building materials as well as their requirements and cost.
  • Your provider may “index link” your policy. This means that the cost of rebuilding is automatically updated as it changes. Even with this feature it may be advisable to have a new survey performed every few years as the costs of labour and building materials do change over time.
  • Remember to keep your insurer up to date with any renovations to your house: Extensions and improvements such as a new fitted kitchen will need to be taken into consideration to ensure your policy is accurate.

The Association of British insurers in association with the Building Cost Information Service provides a very useful site on this topic. This site provides an in-depth guide containing important points to look out for when calculating your sum insured as well as a tool that will calculate the sum for you. It can be found here and is highly recommended, even if only as a guide before having a surveyor carry out a valuation.