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What is the difference between building insurance and contents insurance?

Building insurance and content insurance are two parts of what is generally referred to as home insurance.

The main difference is that while building insurance covers anything that is part of the physical structure of your home, contents insurance covers your possessions inside it such as furniture, appliances and jewellery.

Find out more about the different types of home insurance here.

Should I get building insurance?

Housing repairs can be costly, so building insurance can give you peace of mind that if anything should happen, you won’t be hit with an unexpected expense.

Damage caused by fire, flood or storm can be extremely costly to set right and run into tens or perhaps hundreds of thousands of pounds. By taking out an annual or monthly building insurance policy for a couple of hundred pounds, you know you will be covered for the rebuild or repair costs.

What type of damage is covered in my building insurance policy?

Different people may need different types of cover depending on where they live and what kind of property they have. For example, if you live in a wooded area, falling tree cover might be something you need. Or if you live in an area prone to flooding, then you’ll want to make sure you’re covered for that.

If you live close to a river you may find that your insurer imposes specialist terms, such as extra protection in the form of a flood gate or barrier around your property. You may also find that some forms of damage are excluded, or that the excess (the amount you pay before the payout kicks in) is higher. Check your policy details to see what you are covered for before you agree to the insurance contract.

Can I get temporary accommodation to live in under my insurance policy?

If your house is severely damaged and uninhabitable while it’s repaired, you could be covered for the cost of getting temporary accommodation while the repairs are carried out. There are usually limits to how much cover you get, so make sure you know how much you’re covered for.

Does building insurance carry a no claims discount?

A no claims discount (NCD) is a familiar item in motor insurance. It is a discount you get for not having made a claim over a given period of time, usually 12 months. This can result in your insurance provider rewarding you with a lower premium, though it is not guaranteed because your premium is based on other factors as well.

Some building insurance companies include an NCD within their policy terms – while others do not.

Find out more about how No claims discounts work with home insurance.

What is a compulsory excess on building insurance?

The excess is the minimum amount you have to pay when you make a claim on your building insurance policy. In some cases, you can also agree to pay an additional voluntary excess, which helps lower your monthly premiums but means that your overall payout will be slightly lower.

How do I calculate the rebuild cost of my home?

You can hire a professional surveyor to calculate the cost of rebuilding your home.

Although this will cost you, it may be worth it to get an accurate estimate that helps ensure that you don’t pay more for building insurance than you must.

Is there a difference between the rebuild cost and market value of my home?

Yes. The rebuild cost of your home is limited to any costs, such as materials and labour costs, incurred to physically reconstruct your home from scratch if it were destroyed. It is commonly known as the ‘buildings sum insured’.

The market value of your home also includes the value of the land it is constructed on, as well as any value it derives from its location such as proximity to schools, commercial areas, parks or public transport.