Building and Contents Cover Explained

What Is Buildings Insurance?

Buildings insurance is a type of cover designed to help protect the structure of a property against damage caused by a range of events. It can be relevant to a wide range of property owners, including landlords renting out residential or commercial premises, and business owners operating from their own premises.

Standard home insurance policies are generally not designed to cover properties that are let out or used commercially. Landlords and business property owners typically need a policy that reflects how the property is used and the specific risks that come with that, which is why specialist buildings insurance is worth exploring rather than relying on a standard residential policy.

Buildings insurance, where included as part of a policy, generally relates to the permanent structure of the property. This typically includes the roof, walls, floors, ceilings, doors and windows, as well as permanent fixtures and fittings such as fitted kitchens, bathrooms and built-in storage. Whether outbuildings such as sheds or garages are included can vary between policies, so it is worth confirming this with a broker when arranging cover.

Buildings insurance may be relevant to a range of property types and business situations, including (but not limited to) buy-to-let landlords, blocks of flats, commercial property owners, hotel and guesthouse operators, restaurants, shops, salons and motor traders.

What Does Buildings Insurance Cover?

The specific scope of a buildings insurance policy will depend on the insurer and the level of cover chosen. Many policies may include cover for damage caused by events such as:

Fire and smoke damage
Flooding
Storm damage
Freezing or bursting of plumbing systems
Subsidence and ground movement
Vehicle collision with the building
Vandalism and malicious damage
Repair costs arising from certain electrical issues
Repair costs arising from certain plumbing issues

It is important to check the specific terms of any policy before arranging cover, as the events included and excluded can vary significantly between providers. Buildings insurance policies do not typically cover gradual deterioration or general wear and tear of the building. Other commonly excluded items may include damage caused by insect or bird infestations, leaking gutters, or storm damage to fences and gates, though this can vary by policy.

Where a tenant or visitor suffers injury as a result of an incident at the property, there may be associated legal and medical costs to consider. Buildings insurance alone may not cover these costs. Liability insurance is typically required for this purpose. A broker will be able to advise on whether liability cover should be arranged alongside your buildings policy.

Emergency Repair Cover

Where a plumbing or electrical issue arises that affects the habitability or safe use of the property, the ability to arrange a prompt repair can be important – both for the occupants and for the property owner. Some buildings insurance policies may include or offer as an optional extra cover for emergency call-outs in these circumstances, which could help manage the cost of unplanned repairs.

The availability and scope of emergency repair cover will depend on the insurer and policy terms. It is worth raising this with a broker when discussing your policy to understand what, if any, emergency cover is included or can be added.

Rebuild Cost Cover

In the most serious circumstances, such as a major fire, extensive storm damage or significant structural failure, a property may need to be substantially or completely rebuilt. Buildings insurance policies may include cover for rebuild costs, which can encompass the cost of labour and materials required to restore the structure to its previous condition, subject to the policy terms and the level of cover arranged.

The rebuild cost of a property is not necessarily the same as its market value. In many cases the rebuild cost may be lower, but this can vary depending on the type and age of the property, its construction materials, and the location. Arranging an accurate rebuild valuation, for example, through a chartered surveyor, can help ensure the level of cover is appropriate and that the property is neither under-insured nor over-insured, either of which can cause complications at the point of a claim.

What Is Contents Insurance?

Contents insurance is designed to help protect moveable items and belongings within a property against loss, damage or theft. For landlords renting out furnished properties, this type of cover can be particularly relevant, as the cost of replacing damaged or stolen items would otherwise fall to the property owner.

Furnished rental properties often include white goods, furniture, beds, sofas, appliances and other fittings. Where these items are damaged, stolen or need replacing, contents insurance may help contribute towards the associated costs, depending on the policy terms and the circumstances of the claim.

It is important to note that a landlord’s contents insurance policy covers the landlord’s own furnishings and belongings, not those of the tenants. Tenants are responsible for arranging their own contents insurance to cover their personal possessions.

What Does Contents Insurance Cover?

The scope of a contents insurance policy will depend on the provider and the level of cover selected. Two common approaches to how claims are settled are:

‘New for old’ cover, where a damaged or stolen item is settled based on the cost of a comparable replacement at today’s prices, rather than the item’s depreciated value at the time of the claim
‘As new’ or indemnity cover, where settlements may take into account the age and condition of the item, which can result in a lower payout than the current replacement cost

It is worth understanding which basis applies to a policy before arranging cover, as this can affect how a claim is settled. A broker will be able to explain the difference and help identify which approach may be most appropriate for your circumstances.

Depending on the policy, additional features that may be available for contents cover include:

Replacement of locks following a burglary or loss of keys
Cover for damage to non-permanent fixtures and fittings, such as freestanding appliances and furniture
Damage to floor coverings including carpets
Glass cover, including windows, conservatories and glass doors

The cost of contents insurance can vary depending on the value and nature of the items covered, the type of property, its location, and the level of cover selected. A broker with experience in landlord or commercial property insurance will be able to discuss the options available and help identify a policy appropriate to your circumstances.