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What is Buildings Insurance?
Buildings insurance aims to cover damage of loss to the actual
structure and fittings of your home. Contents cover will cover the
loss of your possessions, in particular those that can be removed
and taken from home to home, but it will not cover the higher value
of your property and those fittings that cannot be removed. The
separate cover that you need to for this is called buildings cover.
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The cover that you arrange needs to be sufficient to cover the
total rebuilding cost of the property that you live in. Do not confuse
this with the property’s market value. The rebuilding cost
could be more or less that the property value if it was for sale.
You are not qualified to work out the rebuilding cost yourself,
but you should find that most insurance
companies can help you to do this. They may have a conversion table
which should enable you to estimate the rebuilding costs, thus giving
you an indication of the level of insurance required. However, should
you be living in a listed building or any other type of very valuable
property, you should obtain a professional valuation first.
The cover offered by the policy will need to keep up with inflation,
so you will find that most insurance companies will index-link their
cover, so that it will grow every year. You should still review
your policy every few years, as the cover may not be adequate for
your needs, especially give the rising house and land prices.
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Your buildings cover essentially allows you to claim the cost of
repairs or the complete rebuilding of the property should it be
destroyed or rendered uninhabitable. You should be provided with
alternative accommodation during this time. You can also make claims
for damage caused by less destructive events, like floods or even
just broken windows.
Many people ask if they need to have buildings insurance. Well,
firstly it is very likely that your mortgage provider will make
it a requirement that you have it before they lend you any money.
Secondly, you should think about the fact that your house is likely
to be your most expensive purchase, so how would you feel if it
was badly damaged and you couldn’t afford to repair it.
However, your mortgage lender cannot actually force you to take
out buildings insurance
with them, although they may try to. There is no guarantee that
they will offer the cheapest rates, so you should search the market.
Also, bear in mind that you need buildings insurance from the
first time that you are responsible for the property, which could
be from the moment that you exchange contracts on a purchase. Make
sure that proper insurance is in place at this time.
You should always ensure that there is proper insurance in place
from the point that you first become responsible for the premises,
even if this is before moving in.
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