Introduction - the insurance of buildings in the United Kingdom can be divided in to two general categories. Residential & commercial. This article concerns the insurance of residential buildings only. Under this form, there are many different classes and covers. A building insurance uk policy will cover the bricks & mortars of your home and lets first look at what insurers define as buildings .In simple terms, the building is anything that you would leave behind if you quit the property for good. Let’s expand our definition to include some actual items that you would find in the insurers definition of a building.

A Buildings Policy - The structure of the home itself, this would include the foundations, the walls, the floors, all doors to the property, windows, roof, plumbing and fixed heating installation system, the electrical wiring. It is usual to also cover Accidental Damage under a building policy to underground pipes and cables so its best to include these in the definition. You must also include permanent fixtures and fittings such as the bath, toilet, bidet and wash basins and any fitted kitchen. So we are talking practically everything that is immovable. To the above list we must now added the outbuildings, garages, greenhouses, sheds, paths, drives, walls, patios, swimming pools, tennis courts etc. Most home owners take out building insurance because it is a requirement of their mortgage; the lender wants to protect their interest (the loan) by making you take out an insurance policy, which you will have to pay for, to cover against a wide range of perils as specified in the council of mortgage lenders hand book. If they survey the premises for you, they will tell you the sum insured. This is the amount that in their estimation it will take to rebuild the property in the event that it is a “ total loss”. Whether you like it or not, this is the amount that you will have to insurer for under the majority of uk, building insurance policies. It is essential that you obtain the correct building sum insured for two reasons.:-

• The insurers will only pay out to a maximum of the rebuilding cost of the property. If your property burns down and you have insured for £100,000 but it only costs £60,000 to rebuild in total, the insurer will only pay the lower amount. The net result is you have been overpaying on your insurance (who wants to do that).

• You must make sure that your building sum insured is not too low as you may find that in the event of claim that you do not receive the full cost of the repairs. In the Uk, insurers may at their discretion apply an “ Average” clause in the event of claim where there is evidence of under insurance, this applies to partial loss claims .To make the numbers nice and easy, if you insured your building for £100,000 and you should have insured it for £200,000, the average clause will have the effect of reducing your claim by 50%, thus an £8000 would be reduced to £4000.

Rebuilding Value - when homeowners approach brokers or insurers to discuss their insurance needs, often a discussion has to take place to explain the difference between UK property value “market value” and rebuilding cost. The market value of the property is what you would expect it to realize if you placed it up for sale. Depending on the location, this can often been far in excess of the rebuilding cost of the property. The location places a very large part in this, you many find in that in particularity desirable areas, and parts of London are a very good example of this that very small houses ( which of course have small rebuilding costs ) can command very high valuations. It must be remembered that when buying a property, you are almost always buying the land freehold and even the property burns to the ground, you will not have to repurchase the land on which it stands.

When calculating a rebuilding cost your insurers will expect it to be for the full amount ( for the reason stated above). The amount must represent the total required to rebuild the structure of the home ( the bricks & mortar), all of the central heating and plumbing costs etc and an allowance for architects & surveyors fees,( to do with rebuilding the home, not formulating a claim) site clearance demolition, shoring up etc. Of course the average man in the street is not going to be able to produce these figures with any degree of accuracy particularly if the home is not constructed out of brick or utilizes some other building technique most end up either guessing or taking the market value of the property which could result in you ending up paying too much insurance premium ( the higher the sum insured, the higher the premium )

What are the alternatives?

• If you have a mortgage of the property, your lender should complete a survey and tell you the sum insured they require to take a policy out at.

• You could appoint your own surveyor and for a fee, they will give you an accurate rebuilding cost.

• You could calculate your self with a reasonable degree of accuracy by using the charts used on the Association of British Insurers website. You will need the dimensions of the property to calculate an answer and you can find the site by click here http://abi.bcis.co.uk