Building insurance is one of the most important aspects of owning a home and protecting your investment. But how do you know if you’re covered for the right amount? And what about extreme weather events like storms or flooding? How about burglaries, burst pipes, or fires? Are your contents covered too? How much will the right policy set you back? It’s enough to make your head spin.
We know how challenging it can be to balance protecting your home and its contents while keeping your building insurance costs manageable. That's why, in this blog, we'll cover everything you need to know about the average building insurance cost, the factors that influence your premiums, and practical tips to help you reduce insurance expenses.
Understanding Building and Contents Insurance Cost
Simply put, building insurance covers your home – specifically the structural aspects like walls, roofs, and floors – while contents insurance protects your personal possessions inside. Many people overlook the importance of contents insurance when arranging their home insurance, yet having both can be crucial financially, if disaster strikes. Combining building and contents insurance is typically the most comprehensive and cost-effective approach. A combined policy with one insurer reduces the overall cost of home insurance (when compared to separate policies) and simplifies managing your home insurance policies.
Consider Sarah Hutchins' story: earlier this year, a severe storm damaged her roof and allowed water to seep in. Originally, Sarah was paying £230 annually for building insurance alone. After seeing a neighbour incur significant out-of-pocket costs for damaged belongings, she switched to a comprehensive policy at £310 per year, which now includes contents insurance. This coverage meant that expenses for roof repairs and the replacement of water-damaged items including a TV, lounge, and coffee table, were fully covered, saving Sarah from over £1000 in potential costs.
This example highlights why it's so important to consider both types of home insurance cover. We’ll provide helpful information on the costs of both building and contents insurance to ensure you’re fully informed.
Note: Although building insurance isn’t legally required in the UK when buying a house, it will likely be required by your mortgage provider. To save yourself time and money, it’s best to get the right level of cover from the beginning, but also regularly update your policy.
Factors That Affect Building Insurance Cost
When insurers calculate the cost of your home insurance premium (including building insurance and contents insurance, or a comprehensive policy that covers both), they’re looking at several factors. These include (but aren’t limited to):
Property Type: Listed buildings often have higher premiums due to specialised materials and labour, while standard constructions typically have lower premiums. Also, whether your home is a flat, semi-detached, or detached will make a difference to your building insurance cost.
Location: Where your property is situated can have a substantial impact on premiums, especially in areas prone to extreme weather, frequent break-ins, or where labour and materials are more expensive.
Property Age: Older homes often have unique features that cost more to repair or rebuild.
Home Size: Larger homes generally result in higher insurance costs due to the increased materials and labour needed.
Personal Belongings: The value of your personal possessions inside the home, from furniture to clothing and electronics, significantly affects your overall insurance premium.
Understanding these factors can help you better understand why your building insurance cost is higher or lower than you might have expected, and help you make a more informed decision about your home insurance cover.
How Much Does Building Insurance Cost in the UK?
Building insurance costs in the UK are as varied as the homes they protect. The price you pay for building and contents insurance can differ greatly, influenced by your property’s type, location, size, and the specific coverage you need.
For a typical semi-detached house, you might expect an average annual building insurance cost ranging from £200 to £300. For a combined building and contents insurance average cost, you’re looking at more like £300 - £400. However, if your home is in a high-risk area or requires special materials for any rebuilding efforts, the costs could be considerably higher.
Location matters too — homeowners in areas like London and the South East generally face steeper premiums. This is often due to the higher costs of rebuilding and labour in these regions compared to the North or more rural zones.
Let’s take a closer look at the average costs of building and contents insurance and how they’ve changed recently. According to the ABI’s Tracker, which surveys the actual prices paid for over 16 million policies:
The average cost for building and contents insurance in a combined policy rose to £364 in the last quarter. Over the past year, this average premium increased by 19%.
For buildings-only policies, the average cost climbed to £284, a 15% increase over the last year.
Contents-only cover averaged £131, up by 7% over the last year.
Important note: While knowing the average building insurance cost in your region can help you benchmark your premium, individual assessments are vital. An accurate rebuild cost assessment ensures that your insurance policy covers the full cost of rebuilding your home, helping to avoid the pitfalls of underinsurance or overinsurance.
Using a Building Insurance Cost Calculator UK
Online tools like a building insurance cost calculator may seem convenient for estimating your home insurance premium, but relying solely on these calculators can be risky. Many calculators provide only rough estimates that may not accurately reflect the true cost of insuring your home.
A building insurance cost calculator in the UK may consider factors such as property size, location, and age, but it often overlooks important details like specialised materials, unique architectural features, or local labour rates. These oversights can lead to you being under or overinsured – leaving you either unprotected or overpaying for your coverage.
For a more accurate assessment, use professional services like RebuildCostASSESSMENT.com. Our RICS-qualified chartered surveyors provide detailed rebuild cost assessments, making sure your insurance policy covers the full (and accurate!) cost of rebuilding your home. This tailored approach protects you from financial disaster in the event of a claim, and can even prevent you from paying too much for your home insurance.
Rebuild Cost and Reinstatement Cost Assessments
A rebuild cost assessment (also known as a reinstatement cost assessment) calculates the full rebuilding costs to rebuild your home from the ground up, considering materials, labour, and other expenses you might not have thought about. This assessment is key for setting the total sum insured on your building insurance policy. But there's another reason why getting your rebuilding costs right matters: if you’re underinsured, you could end up paying out of pocket for repairs due to the 'average clause' in insurance policies. This clause means that if your insurance cover is less than the cost of rebuilding, your insurance payout will only cover a proportion of your claim, even for minor damages.
Take Sarah’s example: Before the extreme weather damaged her home, she updated her rebuild cost assessment with RebuildCostASSESSMENT.com. Originally insured for £300,000, a thorough assessment showed her actual rebuild cost would be closer to £350,000 due to rising material and labour costs. Understanding the average clause helped Sarah realise the importance of accurate insurance valuation. By adjusting her policy to reflect the true rebuild cost, her insurance premium increased slightly but ensured she was fully protected with the right level of cover when the storm struck.
Pro tip: To avoid falling short on coverage, it's essential to understand how the average clause can affect your insurance payouts. Check out our detailed blog post on the average clause to learn more and be sure your property is fully covered.
Want to find out more about building insurance and what’s covered? Read our recent article, Understanding Wear and Tear in Home Insurance.
Practical Tips for Reducing Building Insurance Cost
With the cost of living squeezing budgets across the UK, many of us are feeling the pinch when it comes to rising home insurance premiums. Fortunately, there are several smart ways to reduce your insurance costs without skimping on coverage:
Avoid Overinsuring: Make sure you are insured for the accurate rebuild cost of your home with a professional assessment from RebuildCostASSESSMENT.com. This ensures you’re not paying for unnecessary cover.
Keep Your Policy Up to Date: Regularly review and update your policy to reflect any changes or improvements to your property. This helps maintain accurate coverage and can prevent unexpected costs.
Shop Around: Compare different insurance providers and policies to find the best deal. Don’t settle for the first quote you receive.
Buy a Combined Policy: Consider purchasing a combined building and contents insurance policy. This offers better value for money and reduces your overall building and contents insurance cost.
Pay Annually: Paying your premium annually rather than monthly can save you money in the long run.
Increase the Excess: Opting for a higher excess can reduce your premium. Just ensure you can afford the excess in the event of a claim.
Secure Your Home: Installing security features like alarms and sturdy locks can lower your premium by reducing the risk of theft.
Build Up Your No-Claims Bonus: Avoid making small claims to build up a no-claims bonus, which can lead to discounts on your premium.
By following these tips, you can reduce your insurance costs while maintaining comprehensive coverage for your home.
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Important disclaimer: The information provided here is for general informational purposes only and is not intended as professional advice. While we strive to ensure all information is accurate and up-to-date, the content may not reflect the most current legal or regulatory developments, standards, or practices. No representations or warranties are made (express or implied) about the accuracy of the information provided, and reliance on this information is strictly at your own risk.
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