If you own a house then you need to arrange buildings insurance cover. If you have a mortgage then this is likely to be a condition of the mortgage and there may even be a requirement to arrange this through your mortgage company.
If you own a leasehold flat then the block as a whole may be insured by the management company or the freeholder. If this is the case then your regular service charge is likely to go towards the cost of insurance. Your solicitor should confirm details of insurance before you decide to purchase the property.
Buildings insurance typically covers the structure of the building and fittings. It does not generally include contents which may be insured separately by the same insurer or by an alternative insurer. It is important to check the details of the cover.
How Much Should I Insure my Property for?
The amount for which a building should be insured is NOT the same as the VALUE of the property or the amount paid. The amount for which your property should be insured can be calculated by a Chartered Surveyor. The calculation takes many factors into account including size, form of construction, location, standard of finish, etc. Some insurance policies are index linked, ie, increase each year to take into account increasing costs, however, it is still a good idea to have the sum recalculated from time to time to make sure it reflects the true cost of rebuilding.
Insurance Policy Details
Check the policy carefully as some items may be excluded or have a high excess.
Ask the vendor if they have made any claims on their buildings insurance in the last few years and whether any restrictions/high excesses have been placed on their policy. This may be the case if the property has suffered an insured risk such as subsidence, flooding, etc.
If the property you are buying is of non-standard construction then check whether your proposed buildings insurer will cover the property. Non-standard construction includes some prefabricated dwellings, some timber framed dwellings and some properties of concrete construction. Some insurers may place restrictions on properties with flat roofs/flat roofed extensions, Listed buildings or houses with thatched roofs.
Check whether any restrictions are placed on the policy. It is common for properties which are vacant for more than a certain length of time to have restrictions.
For guidance on buildings insurance policies visit www.moneyadviceservice.org.uk