Generally, 'buildings' is taken to mean the main structure of the home and any property you would usually leave behind when moving house.
For example ;
A fitted kitchen is considered as a permanent fixture of the property. Likewise, a fireplace or a bathroom suite would also be covered as part of the building. Decorative finishes such as wallpaper, murals, coving and dado or picture rails are also included in buildings cover.
However a fitted carpet, although 'fitted' to the room, is not a permanent fixture and would need to be insured as part of the house contents.
Most home buildings policies organise the cover provided under three headings.
- standard perils covered
- additional items of cover that are automatically included and
- optional extensions.
Here are some of the standard perils covered by a home buildings policy:
- Fire, lightning, explosion and earthquake.
- Damage caused by any gradually operating cause is excluded.
- Riot and civil commotion, strikes, labour or political disturbances, malicious damage or vandalism.
Losses from malicious damage or vandalism are excluded if the premises have been unoccupied or unfurnished for, normally, 60 days or more (known as the unfurnished/unoccupied exclusion), or if members of the insured's household (family), their employees or paying guests/tenants caused the damage or loss.
The unfurnished/unoccupied exclusion applies to home insurance perils such as malicious damage, theft and escape of oil or water. Some insurers refer to a period of 30 days rather than 60 days in the exclusion and some only exclude cover when the property is unoccupied and not when it is unfurnished.
- Falling trees. The removal of the fallen tree is covered only if the buildings are damaged.
- Damage to gates, hedges or fences is commonly excluded.
- Collision by aircraft or any other aerial devices, or anything dropped from aircraft or any other aerial devices.
- Collision by animals or vehicles. Damage caused by insects, vermin, or pets is excluded.
- Storm (which requires abnormal atmospheric conditions) and flood.
- Damage to gates, hedges or fences, and damage caused by frost is excluded. Because damage to these items is more likely to result from wear and tear or lack of maintenance
- Subsidence, ground heave or landslip may also be excluded - this is to emphasise that these perils are covered separately.
- Water or oil escaping from any fixed water or heating installation, washing machines and any other domestic equipment.
- The cost of repairing the installation or appliance from which the water/oil escaped is not covered (insurance is not a maintenance contract), although, as you will see later, there may be cover if the damage is to plumbing due to freezing.
- Any damage happening when the premises are unoccupied or unfurnished for 30 days or more (60 days for some insurers) is also excluded, as is damage resulting from rusting, corrosion or general wear and tear.
- Theft or attempted theft - cover is as defined in the theft Act 1968, i.e. 'Dishonestly appropriating property belonging to another with the intention of permanently depriving that other of it'.
There is no cover for theft or attempted theft, if the property has been unoccupied or unfurnished for 60 days or more (30 days for some insurers). Loss or damage caused by paying guests is also excluded.
Subsidence is the downward movement of the land on which the buildings stand. This can be due to a number of causes, including underground workings (e.g. mines) or the removal of moisture from clay soils caused by prolonged dry weather or tree roots etc.Heave occurs when the ground rises up after the moisture content of the soil increases. This could occur after continuous rain following a period of very dry conditions. Landslip is the falling away of land. This could be caused, for example by heavy rain on a sloping site. Landslip is a particular problem in some coastal areas even with the protection of coastal defence, hence the specific exclusion of coastal and riverbank erosion.
Standard exclusions are:
- normal shrinkage and settlement
- faulty workmanship, design or materials
- demolition, structural alteration and repair
- coastal or riverbank erosion
- movement of solid floor slabs unless the foundations are damaged at the same time
- damage to peripheral aspects of the property (swimming pool, terrace, summerhouse, gates etc.) unless the main house is damaged at the same time
- the first £1,000 of every claim.
- Falling television or radio receiving aerials, aerial fittings and masts.
Most insurers include cover for damage to the building from a satellite dish or radio receiving devices as standard. However, the dish/aerial itself is not a permanent fixture and would be considered as part of the home contents rather than the building.
Most buildings policies include some additional items of cover, either extending the definition of 'buildings' or adding to the standard perils we've already considered.
Common additions are cover for:
Damage to services
Cover is for accidental damage to services to and from the building for which the insured is responsible - e.g. accidentally hitting a water pipe or telephone cable when digging out for a new patio. Maintenance or normal blockages (e.g. of sewage pipes) is not covered. Insurers, however, are sympathetic to the problems that drains can cause. Some will pay up to a fixed sum (typically £1,000) to break into and repair a pipe to clear a blockage, if normal methods of releasing the blockage have been unsuccessful.
Repairs to plumbing after freezing
Cover is for the cost of repairing damage due to freezing.
General wear and tear, rust or corrosion are excluded, the unfurnished/unoccupied exclusion applies and plumbing that is outside or in an outbuilding is excluded.
Damage to fixed glass and sanitary fittings
Accidental damage to fixed glass (e.g. in windows, doors, conservatories) and sanitary fittings (e.g. sinks, cisterns, baths) is covered except when the property is unoccupied or unfurnished for more than 30 days (60 days for some insurers).
Loss of rent
This addition is designed to help those who:
- own their property leasehold and have to pay ground rent to the freeholder whether the property is habitable or not
- rent out part of their property which becomes uninhabitable
- have to move out of their property if becomes uninhabitable and have to rent somewhere else.
The additional cover only applies if the peril that makes the property uninhabitable is an insured peril.
Insurers also usually impose a limit on the amount of rent that can be recovered of between 10% and 20% of the buildings sum insured. Others apply a fixed limit, which varies between £25,000 and £100,000.
Legal fees, architects' and surveyors' fees and the cost of removing debris
This cover will be important in a situation where a house is extensively damaged in, say, a fire and the remaining structure must be knocked down.
Cover is for:
- legal fees incurred in the reinstatement of the buildings. The fees must not be more than that recommended by the relevant professional institute
- necessary costs incurred to clear the site and make the site and the buildings safe and the additional cost of complying with statutory building regulations or municipal or local bye-laws during rebuilding.
The sum insured must reflect the cost of these items.
Cover is provided for damage caused by forced entry to the home to deal with an emergency. Typically a limit of £1,000 will apply.
Loss or theft of keys
Cover is provided for the cost of replacing locks on the outside doors of the home, if the keys to the home have been lost or stolen. Cover may be subject to a monetary limit of up to £500.
Some insurers further extend cover to include:
- keys to safes or alarms
- accidental damage to locks.
Cover is provided for the cost of tracing the source of a leak which causes damage to the home and repairing any damage.
The next section in a standard building policy usually deals with the optional extensions available to the policyholder.
Unlike all the cover we've looked at so far, optional extensions are chargeable. So for each one the policyholder chooses, the premium will be increased.
The main optional extension offered by insurers is to include cover for full accidental damage.
By paying an additional premium it is possible to have full accidental cover.
There are usually a number of additional exclusions under this extension, including damage while the dwelling is lent or sublet, and damage caused by:
- inevitable or gradually operating perils such as wear and tear
- damage whilst the property is let or sublet
- settlement or shrinkage
- climatic conditions
- structural alteration or repair
- faulty design or materials
- rot, fungus, vermin or insects and
- chewing, scratching, tearing or fouling by pets.
All home buildings policies include legal liability cover as part of the basic package.
Specifically, the cover provided under the buildings legal liability section can be summarised as:
legal liability to members of the public (third parties)
liability incurred under the Defective Premises Act 1972. This Act applies in England and Wales and covers faults in houses formerly owned or occupied by the insured.
Examples of incidents covered would include the insured being sued by a passer-by who was injured by loose tiles falling off the roof, or from a garden wall that collapsed on them.
Most of the following exclusions are market exclusions and therefore apply to all property policies (including home contents policies)
War is regarded as a 'fundamental' risk and therefore not insurable. It is considered the responsibility of the State rather than of insurers.
Pollution or Contamination excludes any loss, damage or liability directly or indirectly caused by pollution or contamination, unless it arises from a sudden and unforeseen accident. Gradual losses are therefore excluded, except oil leakage from a 'fixed heating installation' (which you have already seen is a specific peril).
Radioactive contamination and explosive nuclear assemblies could cause losses greater than any insurer could cover. Cover is excluded under home insurance policies and provided instead to those using nuclear materials by a series of 'market pools'.
Insurers and underwriters each accept a share of these risks according to their underwriting capacity.
Sonic bangs are the result of pressure waves created by aircraft travelling at supersonic speeds. These pressure waves can cause serious damage. A right of action would exist against the operator (the Ministry of Defence in the case of military aircraft).
Terrorism cover is now restricted following the extreme terrorist attacks in the USA on September 11 2001. Wordings will vary from policy to policy, but the aim is to exclude any loss or damage, howsoever caused 'resulting from or in connection with any act or terrorism'. Terrorism is defined as 'the use, or threat of use, of biological, chemical and or nuclear force or contamination by any person(s) whether acting alone or on behalf of, or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purposes, including the intention to influence any government(s) or put any section of the public in fear'.
Confiscation excludes the loss or damage to property as a result of confiscation, seizure, or destruction by any government, public or local authority. This is because the property will have been confiscated, seized or destroyed by a competent authority who will either have had a right to do so because of criminal wrongdoing or else the authorities will be responsible for the claim themselves.
Computer equipment: this is concerned with loss or damage brought about by the failure of computers or other electronic equipment to recognise correctly any date as its true calendar date. This exclusion was introduced at the time of the so-called 'millennium bug' avoiding claims arising from computer equipment failing to recognise the change in date (from 1999 to 2000) on entering the new millennium. The exclusion has been retained as a safety measure because of the accumulation of claims that might arise from the same cause. It also excludes loss or damage caused by computer viruses.
Deliberate Acts excludes losses or damage from any act that the insured, or a member of their household, causes deliberately. Some insurers replace this exclusion with a requirement for 'the insured to take all reasonable steps to prevent loss, damage or accident, and to maintain the property in sound condition and good repair'.
There is one final 'exclusion' which applies to all building insurance policies - the policy excess.
This is a set amount which will be excluded from the payment of each claim.
The amount of the excess varies between insurers but is generally in the range of £50 to £100 (except for subsidence and associated perils where the excess is substantially higher).
Some insurers allow the policyholder to opt for an increased excess in return for a discount on the policy premium.
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