There are many different types of insurance available in the UK – and sometimes, it can be confusing to remember what each type of insurance covers.
A common point of confusion is about the difference between building insurance and home insurance. Are they the same thing – and if not, what is the difference?
As a homeowner, it is crucial that you understand all the different insurance options available, and what the difference is between different ones. Read on for an in-depth look at the difference between building insurance and home insurance.
What is Building Insurance?
Building Insurance covers the structure of your home as well as any fixtures and fittings. Depending on the policy, this will sometimes include things such as fitted kitchens and bathroom suites. It will also typically cover:
- Sheds
- Garages
- Fences
- Drains
- Pipes
- Cables
These items are considered as being part of the structure of the house, which is why they are covered in building insurance.
Building insurance is particularly important for landlords, because it provides them with protection if something goes wrong while they are renting a property out.
When you take out building insurance, you should insure yourself for the amount it would cost to completely rebuild your home. You should also keep in mind that rebuild costs will typically increase over time – and it is therefore important to review the amount your building insurance covers on a regular basis.
Furthermore, if you carry out extensions on your property, the rebuild costs are likely to increase as well, which will once again require a reassessment of your building insurance.
If you’re taking out a mortgage, your lender will probably insist you get buildings insurance before they’ll loan you the money. If you’re a tenant, you’ll only need to cover your belongings – your landlord looks after the buildings cover.
What is Home Insurance?
Home insurance is, as the name suggests, insurance for your home. This can come in two forms: building insurance or contents insurance. You can also get a combined home insurance policy which includes both.
Buildings insurance covers the structure of your home as well as any fixtures and fittings including fitted kitchens and bathroom suites. Contents insurance covers items which are within your home, such as:
- Clothing
- Jewellery
- Furniture
- Electrical items
Home insurance is not a legal requirement, but it is extremely advisable. It provides you with essential cover if your house is destroyed.
Combining building insurance and contents insurance is usually cheaper than having two separate policies. This is an incentive for homeowners to get both types of insurance. Keep in mind that the price you pay will vary on the value of items in your property, the material your home is constructed out of, its location, and more.
Is Building Insurance the Same as Home Insurance?
The sections above have clearly outlined the difference between home insurance and building insurance. In short: building insurance is a type of home insurance (with the other type being contents insurance), whereas home insurance is the overarching name for insurance on your home.
What does Home Insurance not cover?
There are a few things which Home Insurance does not typically cover in the UK. This usually includes:
- Typical ‘wear and tear’ on a property
- Unoccupied properties
- Instances of incorrectly supplied information
- Negligence
- Lack of maintenance
It is important to check with your insurer to get clarity on this topic, before making assumptions.
How much does Home Insurance cost?
According to MoneySupermarket[1], the average combined home and contents insurance policy costs £140 a year last year.
There are a few steps you can take to get cheaper home insurance quotes. These include:
- Pay annually
- Pay more excess
- Get quotes from many different insurers
- Improve home security
- Build up your no claims discount
- Keep your house occupied
When you go multiple years without making a claim, you will usually be able to access a no claims discount. This is when your home insurance quotes may start to noticeably go down.
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