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How much does buildings insurance cost?

If you are taking out a mortgage, you will be required to also get buildings insurance. It is important you are aware of how much this may cost you, so you can keep up with your finances when moving.

How much does buildings insurance cost?

If you are a homeowner, you will need buildings insurance to protect your property from potential damage. This can mean damage from natural events like flooding or fire, from vandalism or even vehicle collisions.

Most lenders will require you to get buildings insurance before they can approve your mortgage application, so it will be a compulsory cost. If you own a property but do not have a mortgage, or you are a landlord, buildings insurance is not compulsory but is worth getting to avoid a large pay-out from your own pocket should any damage occur.

Learn more about what buildings insurance includes.

What does it cost?

According to the AA’s data, the average UK price will be around £119.22 per year. If it is combined with contents insurance, it will be around £163.83 per year. However this is not the set price for buildings insurance, as it can vary wildly from property to property and year to year.

Like other insurance policies, buildings insurance will be paid in instalments to your policy holder. Usually it is paid annually, but it could also be monthly.

How is it calculated?

Your insurance may cost significantly more or less than the national average because it will be calculated based on what it would cost to rebuild your specific property.

Remember, this means what it would cost to buy materials to completely take down and rebuild the house, as well as the labour to do so. This is not the same as the market value of the home.

To give you a sense of a rebuild cost: insurance experts Nimble Fins’ research calculated that the average cost to rebuild a house in the UK is £197,000.

Other things that may be factored into the cost of buildings insurance are:
  • The desirability of the local area
  • The age of the property
  • Number of bedrooms
  • What materials the property is made from
  • Outdoor buildings e.g. garages
  • Built in fittings e.g. baths
  • Utilities
Because the cost of buildings insurance can vary so widely it’s always a good idea to compare costs from different insurers to find a price that works for you.

It can also be helpful to try and calculate for yourself how much it would cost to rebuild your home. Doing this before you start looking for buildings insurance can help you get an idea of what you should expect to pay. There are many services available online to help you calculate your homes rebuild cost.

What types of policy are there?

As well as varying based on the house itself, the cost of a buildings insurance policy will also depend on the type of policy you take out. There are two main types of policy:

Sum rated – this standard policy will charge you based on the cost of rebuilding your home, as expected. This cost will also include the price of expenses such as labour or architects’ fees. With this cover you know exactly what you are paying for, however bear in mind that building costs change over time, so your sum rated policy may increase or decrease in cost over time too.

Bedroom rated - instead of charging based on the exact price of rebuilding your home, this policy will charge you based on how many bedrooms your home has. It is usually more expensive but protects against under-insuring. You don’t need to calculate the rebuild costs for this policy, however you may find that you end up paying more than you would need to rebuild.

Many policies will offer a ‘no claims bonus’, that rewards you for not making any claims over a certain period of time, usually a year. This will increase the longer you go without claiming.

Are there extra costs?

The cost of your buildings insurance may also be affected by the inclusion of optional add-ons.
Some policies offer you the ability to ensure your house against accidental damage, that you may have caused yourself. This will be small accidents, for example, accidentally smashing a window.

You may also want extra insurance to cover other potential problems; for example the cost of temporary accommodation if your property is unliveable while it is repaired, or the cost of legal fees if you wish to take legal action against people who damaged your home.

A common addition to a building insurance policy is the option to bundle it with contents insurance. This way you can also protect items in your home that are not part of the structure or fittings.

Learn more about contents insurance.
 
 

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