When it comes time to insure your new home or choose a new insurance policy for your existing property, you’re probably going to Google search ‘best home insurance’ or something similar. That search query is going to throw up a lot of responses including the terms ‘building insurance’ and ‘home insurance’. And then the confusion begins.
What is building insurance vs home insurance? Aren’t they the same thing? Or do I need two different policies? How much is this going to cost me?!
Don’t worry, we’re here to demystify things for you.
When it comes to protecting your home, understanding the difference between building insurance and home insurance is really important. Both types of policy provide coverage in the event of damage to your property, but they differ in scope. Knowing the details will help you make an informed decision about what type of insurance best suits your needs and gives you peace of mind. If you’re confused about what each policy covers (you’re not alone), this guide will clarify the distinctions and help you pick the right coverage for your property.
What is Building Insurance?
Building insurance covers the structure of your home, including the walls, roof, and permanent fixtures like fitted kitchens and bathrooms. If your home suffers damage from events such as floods, fires, or burst pipes, building insurance covers the rebuild costs or necessary repairs. This type of policy is typically a requirement if you have a mortgage, as mortgage lenders want to ensure that their financial stake in the property is protected.
Building insurance specifically focuses on the physical aspects of your home, excluding any personal belongings or contents. It’s essential to ensure that your policy accurately reflects your home’s rebuild value, so you’re not left short in the event of a disaster.
Wait a minute! Don’t know your current rebuild value? Well, it’s time for a rebuild cost assessment, before you do anything else! Without it, you could fall victim to the average clause in insurance and not be fully covered.
What is Home Insurance?
Home insurance is just like building insurance in that it covers you financially for unexpected disasters that damage or destroy your home, but where people often get confused is that the term ‘home insurance’ can also refer to a combined building and contents insurance policy. While you can buy both separately, it’s usually better value to have a combined policy that includes your home and your belongings, including items such as furniture, electronics, and clothing. Home and contents insurance policies sometimes cover accidental damage to these items and may offer protection against theft or other unforeseen events like the damage caused by burst pipes.
Top tip: When it comes to any type of insurance – be it home, car, health, or life insurance – the devil is in the details. Some policies may cover the repair of burst pipes, but not the damage they cause, for example. Always read the fine print and be sure you’re covered for everything you think you might need (not to mention, a lot of things you’d never think you’d need).
Building Insurance vs Home Insurance: What’s the Difference?
The key difference between building insurance and home insurance lies in the scope of coverage. Building insurance protects the structure of your home, while a home insurance policy that includes contents insurance also protects your personal belongings. Many people opt for a combined policy, but it's important to understand that each type serves a distinct purpose. If you’re a homeowner, especially with a mortgage, ensuring that your building insurance covers the full rebuild cost is vital. On the other hand, contents insurance is more flexible, depending on your belongings and how much you’d like them covered for.
Common Scenarios and Coverage Needs
When deciding between building insurance, contents insurance, or a combined policy, it’s important to consider your unique coverage needs. For instance, if a burst pipe causes flooding, building insurance would cover the repairs to the home’s structure, while contents insurance would cover damage to your belongings like furniture or electronics. If you’ve got a lot of expensive electronics in the home, some one-of-a-kind antique furniture, or some beautiful brand-new flooring, your contents coverage needs are going to be higher. On the other hand, if you’re not so worried about replacing that saggy old couch and the carpeting you inherited with the house, you can probably opt for more modest coverage.
Here’s another scenario: If you've recently installed a new fitted kitchen, you’ll probably want to ensure that both the permanent fixtures and any new appliances are properly insured. Building insurance covers the structure and fixtures, while contents insurance protects moveable items like appliances – think of that new double-door fridge and the gorgeous blinds you just had installed. Similarly, if you’re planning on improving your home, such as adding a new extension, you may need to update your policy to reflect these changes, ensuring that the increased value is covered.
Planning a renovation? Do you need building insurance that covers home improvements? You might want to check out our blog article, Do I Need Building Insurance When Renovating?
How to Get the Best Insurance Quote
Finding the right insurance policy starts with comparing quotes. Start by using comparison sites like Go Compare or Compare the Market, which allow you to view policies side by side and help you find a competitive price that doesn’t skimp on coverage.
When comparing quotes, pay attention to key factors like the total coverage offered, the value of your fixtures and fittings, and the rebuild cost of your home (remember – this is not the same thing as the market value). Also, check whether the policy covers accidental damage (particularly if you’ve got young kids or a particularly clumsy spouse, for example).
We covered this topic at length in our blog How to Compare Building Insurance, so be sure to check that out for more details.
Remember: The lowest quote isn’t always the best choice. Make sure to review customer feedback, check for any hidden clauses, and ensure it provides adequate cover for your home and belongings.
Understanding Rebuild Cost Assessment
Many people mistakenly assume that their home’s market value is the same as its rebuild cost, but this is often not the case. Rebuild costs depend on the structure of your home and the cost to entirely rebuild it, including materials, labour, and other factors that are unrelated to the home’s location or real estate market value.
Having an accurate rebuild cost assessment ensures your building insurance covers the full cost of rebuilding your property if disaster strikes. Failing to do so can leave you underinsured and facing significant out-of-pocket expenses. Services like RebuildCostASSESSMENT.com offer detailed assessments that provide peace of mind, ensuring your policy covers all potential costs.
Don’t Forget The Fine Print: Get a Rebuild Cost Assessment
Let’s keep it simple: Building insurance protects the structure of your home, while contents insurance covers your personal belongings. Opting for a combined home insurance policy may offer comprehensive protection, but it’s essential to ensure that your coverage aligns with your specific needs.
But don’t stop there! If you don’t have an accurate rebuild cost assessment, this could affect your insurance payout if the worst happens. Get a rebuild cost assessment done now, to make sure your home is fully protected against any unforeseen circumstances.
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