Building Insurance

If you're looking for a building insurance quotation, most UK insurance companies will request similar types of information from you, the policyholder. Most of this data relates to the characteristics of the building you want cover for. The rest of it relates to you as an individual, in terms of assessing you and the eventual premium you will pay. So before you start shopping around for a competitive quote, make sure you have the following information to hand...

Whether you're planning to buy online or speak to an insurance company on the telephone, they are likely to want to know whether your home is constructed in a standard way. 'Standard Construction' is an insurance term, which can be applied to a variety of types of buildings, (such as detached homes, semi-detached houses, bungalows) even though they may look very different. Generally speaking insurance companies view 'standard construction' as a home built of brick, stone or concrete and with a pitched roof, made of slate or tiles. Sometimes the definition of standard construction may also include metal or asphalt roofing. Many people have a roof which is made of timber or asphalt. Insurers do not generally consider these types of homes to be of 'standard construction'. They are worried about the type of roof because it is the entry point for most water leaks into the interior of the structure. Most flat roots do not have a very long lifespan, and homeowners do not always undertake regular building maintenance to ensure they are fully watertight.

Next most building insurance companies will want to know how old your property is. Generally speaking more insurance claims will arise from older buildings, compared to those constructed in the last few years. As a result the older your building is, the higher the typical annual premium is likely to be. Conversely brand-new homes may attract discount premiums as insurers see them as unlikely to go wrong. Many older buildings are also listed, with a grade 1 or grade 2 status. This generally makes it even more difficult for policyholders to find a competitive quote to compare. This is because some insurers specifically exclude listed buildings on their policy wording. Doing any repair work on a listed building can entail waiting for approvals from the local authority. As a result claims costs can rise for the insurer - most policies include cover for loss of rent or alternative accommodation. This will mean that homeowners may find themselves being put up elsewhere, while the lengthy repairs are undertaken on their listed home. Luckily not many buy to let properties have listed status - as landlords view them as difficult to maintain or develop for rental purposes.

Next the insurer is will to want to know where the building is located. The price of most building insurance policies is strongly influenced by an automated postcode rating system. This system uses demographic statistics of all areas of the United Kingdom, identifying soil types, flood zones, theft claim statistics and so on. Insurers' long experience means that they are familiar with the risks associated with different parts of the UK. These may include the risk of severe flooding near rivers, or subsidence in area with poor soil, or claims from vandalism of properties left empty. Insurers prices will also be influenced by the actual number of existing policyholders within postcodes. If there are a cluster of existing risks in one small postcode, the insurance company may increase prices. Insurers don't like 'all their eggs in one basket'. In other words they would prefer to avoid risks damaging more than one customer at one. A severe weather in one town could potentially cause a huge number of home insurance claims. If the spread of risk covers a wide geographic area, then each risk event will have proportionately less claims.

When your request a quote, you will also be asked to enter the buildings sum insured value. This is also used in the mathematical calculation of premium. This reflects the cost to rebuild the entire property, should it be entirely destroyed at some point in the future. For instance if your house unexpectedly burnt down, the insurance company would need to pay to clear the site, employ an architect and surveyor, just to design and plan to rebuild it. The insurer would then have to pay a team of builders to rebuild your house. There is much confusion over what the building sum insured value actually is. Many policyholders are simply not sure, or confuse it with the actual market value. The market value bears no relationship at all to the building sum insured - market values tend to be much higher. Entering a lower amount may mean you are underinsured. On the other hand na�vely over estimating the sum insured, could also massively increase the premium you are quoted - with no extra benefit to you in the event of claim.

Lastly before quoting a price, the insurance company will want to know about you as a person. They will ask you the basic contact details for correspondence purposes and to check you are who you say you are. They may also be interested in your occupation and date of birth (as some policies link prices to the profile of policyholders). In particular they will want to know if you have made any previous claims under your existing policy. Many offer a 'no claims discount', for careful and prudent homeowners. This discourages the practice of submitting lots of small claims every year, by rewarding policyholders in the preceding year with a discount. You should always complete any form as accurately as possible, so that 'material facts' are not left undisclosed. Failure to do so may invalidate any future building insurance claim.