None of us wants to spend more money than we have to; especially on something as practical (dull, even) as buildings insurance. You probably buy it as part of a home insurance policy. But it’s a good idea to know what the ‘buildings’ part should cover.
Saving money on buildings insurance
Buildings cover in home insurance policies vary widely. Not all policies are the same but you don’t always get what you pay for either. Here are some key buildings cover areas that I recommend you check when you’re buying a home insurance policy.
1.The excess levels.
The excess is the first part of the claim you have to pay. Most insurance policies have a compulsory excess and a voluntary excess, which means you can choose to pay a higher excess in return for paying a lower premium. However, a number of policies have a higher excess level if you are claiming because of water damage. In some cases, this ‘water damage excess’ could be hundreds of pounds.
2. Trace and access.
This clause means the insurance company will pay for the cost of finding the source of the problem and not just the resulting damage. This is important. If, for example, an underground pipe in your kitchen developed a leak, without ‘trace and access’ you would have to pay for the cost of a plumber digging up your kitchen floor out of your own pocket. Watch out, because some insurance policies have quite low limits on trace and access (as little as £2,000). Try and get a policy that will pay at least £5,000 for a trace and access claim.
SAVVY TIP: Trace and access is sometimes called ‘seek and find’.
3. Alternative accommodation.
If your property is seriously damaged, for example by fire or flood, you may need to live elsewhere for several months. Some insurers have relatively low limits on the amount they will pay out for alternative accommodation. I’ve just had a look at some insurers’ websites and the amounts vary from £20,000 to £100,000 and above.
SAVVY TIP: If you want to save money by choosing a policy with a lower alternative accommodation amount, that’s fine. But don’t sign up for one without checking the cover. As if your home was badly flooded or damaged by fire, you could spend well over a year living somewhere else.
4. Matching items.
This clause sets out what the insurer does if you damage one item that’s part of a set. For example, if you were to damage a bath that matched a basin and toilet, some policies would only pay for the damaged item to be replaced and not the rest. This would apply even if you couldn’t get a bath to match the basin and toilet because the style had been discontinued.
SAVVY TIP: Some policies will sell ‘matching of items’ cover separately. You’ll have to pay extra for this. If not, check the policy documents to make sure you’d be covered. Or ask your broker or insurance company how they cover matching items.
5. Whether they pay using vouchers.
Some insurers are fonder of paying claims using vouchers from major high street retailers or online suppliers. You can’t be forced to take a voucher for a shop that doesn’t stock what you’re claiming for. However, some insurers pay with vouchers and then make you fight for your right to have a cash or replacement instead. It’s hassle you can do without when you’re trying to make a claim.
6. How they handle claims.
It’s difficult to get direct information about how a company handles claims, although you can often check out customers’ feedback on a price comparison site and an insurance broker should be able to tell you what their own experience is.
SAVVY TIP: You can find out if an insurer has a high number of unresolved complaints to the Financial Ombudsman Service, which is a free adjudication service for consumers. You can also find out if the Financial Ombudsman Service found in favour of the consumer most of the time (which might suggest the company was trying to wriggle out of complaints). It publishes and updates complaints figures every six months.
How much buildings insurance do you need?
Buildings insurance will cover the cost of repairs to your property or a complete rebuild if it’s so badly damaged that it can’t be repaired. That means you don’t need to insure it for the same as the price you paid for it or what it’s worth now.
- If you’re about to buy a property, ask your surveyor to provide a valuation figure for rebuild costs.
- Otherwise, you could use the Association of British Insurer’s rebuild calculator. You have to register in order to use it, but it’s free to do and the calculator is relatively straightforward to use.
SAVVY TIP: Some homeowners have too much buildings insurance, because they insure their property for the market price. While it’s a waste of money to do that, because you won’t get a higher payout when you claim, you should make sure you aren’t under-insured. If you are, your insurer won’t pay the full amount of your claim. Useful links:
BIBA (the trade body for insurance brokers). You can search for a broker near your home or work or one who specialises in a particular type of insurance.
Which? doesn’t have a price comparison service but publishes reviews of products, including insurance companies.
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