What’s the Difference Between Building and Contents Insurance?
Financially protecting your house in case of an unforeseen incident can be the difference between a viable recovery and complete destitution. Building and contents insurance represent the two main type of house insurance that will help you rebuild your home.
They are, in fact, two separate types of cover. The difference between buildings and contents insurance is:
One, building insurance, is put in place to protect the house itself from structural damage. Should something happen which destroys all or part of your house, it is this level of cover that is going to enable you to repair it.
The other, contents insurance, is available to protect your belongings from damage, theft or loss. Contents insurance has grown since its inception to cover the things you own when you take them away from home and is often responsible for such diverse objects as mobile phones, laptops and bicycles.
Moving into a new home often means taking out combined building and contents cover and almost every mortgage requires a minimal level of buildings property insurance to make sure that the security you have on the loan is protected.
What can you claim on buildings insurance?
Basic buildings insurance is there to pay for the cost of repairs if your house becomes damaged or you suffer financial loss due to the following:
- Storms, floods, earthquakes – these major unforeseen events can cause significant damage to a house or destroy it entirely. Buildings insurance is there to help repair or even rebuild entirely after such an incident. Note that in areas where the problem is likely, it may be exempt from the insurance (for example, flooding for a house built on a floodplain). In these cases, you may have to pay extra for the cover, or suffer an exemption, meaning that you would have no insurance in this case.
- Fires and explosions – like the above, these major incidents could require a complete demolition and rebuild of the home. If this is the case, your insurance would also cover additional costs, such as the demolition and clearing of the site, architect’s fees for a replacement house plan and any legal fees. With fire and explosions, your insurance would become immediately invalid if it was found that you did anything to create the situation (or failed to stop it if you had prior knowledge).
- Theft, attempted theft and vandalism – while the theft of your belongings would come under contents insurance, rather than buildings cover, any damage done to your house (for example, broken windows or smashed doors) would be covered by your buildings insurance.
- Subsidence – movement of the ground under your house over time can cause an instability in its structure, leading to subsidence. Your insurance would cover you for the time and costs involved in repairing the problem (or rebuilding your house in extreme cases). It is important that no sign of the subsidence was detailed by the surveyor before buying the house or taking out the insurance.
- Frozen and burst pipes – the winter can be destructive to parts of your house - frozen water expands and can crack and break pipes, including those that lie under the ground. This can be extremely costly depending on the location of the burst pipe so cover for this unexpected event is recommended.
- External damage – structural damage done due to external objects should be covered in your policy. This includes damage due to a fallen tree or lamppost, or that brought about by moving satellite dishes or TV aerials.
- Vehicle collisions (including aircraft) – it is rare to have a bus crash into your front garden, but it does happen. Should your house be damaged due to a vehicle collision, including any aircraft or associated debris falling from the sky, then you will be entitled to make a claim.
Buildings insurance doesn’t just cover the house itself, but all structures on the land, including sheds, garages, fencing, walls, the garden etc.
Fixtures and fittings, such as baths and integrated kitchen appliances are also generally considered part of the buildings insurance instead of contents cover. Some fittings, such as carpets, are confusingly considered to require contents insurance – it’s always worth checking with your insurance provider to know exactly what level of fixtures and fittings cover you have.
Contents insurance is designed to protect your personal possessions. It provides financial cover for all your furniture, electronic equipment, jewellery, books, and collections of Doctor Who figures. It also typically has a level of cover for items that you have temporarily taken from the home such as bikes, mobile phones or laptops.
Contents insurance is to protect against:
- Theft, attempted theft and vandalism.
- Fire or explosions.
- Natural disasters, including lightning, earthquake etc.
- Flooding – depending on your location and policy details.
Some contents insurance can also protect you in the case of accidental damage, such as spilling red wine onto your sofa, or dropping your mobile phone onto the kitchen tiles. This isn’t always the case, however, so remember to check your policy details and include accidental damage cover if you need it.
The exact list of things that you can cover with contents insurance is vast. Typically, most things will fall under the following legitimate categories:
- Furniture (including bedding, cushions etc.)
- Electrical goods
- Kitchen items
Depending on your policy, you may also include clothes, carpets, curtains, personal items such as jewellery and minor collections. Home contents insurance also often includes bicycles, garden tools and children’s outdoor toys. Plus, you can choose for your policy to include money in the house, the contents of your fridge and freezer in the case of an extended power outage and even the plants in your garden.
In every case, it is important to inventory your entire home and list everything for the insurer to agree to. Understanding how much contents insurance you need is a matter of correctly estimating the total value of your possessions. Estimating too low might mean you are not properly covered and estimating too high means you will be paying over the odds for your contents insurance.
Additional specialist insurance exists for some items, such as personal collections. If you have a treasured group of belongings, such as wines, coins, first-edition books or collectable cards, then it is worth contacting a separate collections insurer and using them to provide adaptable and comprehensive cover for these valuable items.
Research statistics show that the average combined buildings and contents insurance is approximately £163 per month. The level of valuable contents held within the average household is ever on the rise, and this figure represents that with a baseline of £35,000 worth of home goods being covered.
Of course, if your home is cheaper than the national average and your total goods somewhat shy of the £35,000 approximation, you can expect cheaper home insurance.
If you rent your home, you won’t need buildings insurance as it is the landlord’s responsibility (though you will still be expected to keep the house in a good state and pay for any damage). If you have bought your home, then buildings insurance will have been part of the mortgage criteria to protect their investment.
Contents insurance is completely optional, though a landlord may stipulate it as part of a rental agreement, especially if the building comes part- or completely furnished.
Whether it is placed on you through obligation or not though, both forms of home insurance are a valuable addition to your personal finance portfolio.
Like with all insurance, it pays to shop around and not just accept the first offer you find. Go to comparison sites to see what deals you can get in content insurance quotes and remember to give them a call to go through any specifics and questions you may have.
Here at Bobatoo, we work closely with some of the UK’s top insurance providers to make sure that you’re always getting the best deal. Get a free, non-obligatory quote on buildings or contents insurance with us today!