Buildings insurance covers the cost of rebuilding your home if it’s damaged or destroyed. This policy is usually compulsory if you are going to purchase your home with a mortgage.
Buildings insurance usually covers loss or damage caused by:
- fire, explosion, storms, floods, earthquakes
- theft, attempted theft and vandalism
- frozen and burst pipes
- fallen trees, lampposts, aerials or satellite dishes
Buildings insurance is now a standard condition of the mortgage and needs to cover the cost of your mortgage. Your lender will usually allow you to choose your own insurer. If you are not purchasing with a mortgage buildings insurance is not compulsory but it is advisable.
If you are a Leaseholder, your Lease will usually require you to take out buildings insurance. However, this is usually taken out by the Freeholder or if there is a Management Company involved the Managing Agent will provide the Buildings Insurance Policy. The freeholder or Management Company may request payment for taking out the policy on your behalf.
You lender will usually require your buildings insurance policy to cover the full cost of rebuilding the home. The rebuilding cost is usually specified in the Mortgage Offer or Mortgage Valuation Report, and this sum is different from the price paid for the property or the current market value of the property.
Author: Anneka Stephens – Trainee Solicitor