More On House Buildings Insurance

How much to insure for

Getting your sums correct when deciding how much insurance to take out can be one of the biggest factors in getting any claim processed satisfactorily. The sum insured may be based on the householder's own estimate, or - more often - on a mortgage valuer's estimate. If this is too low, the insurance company will not pay more, and will also scale down smaller claims. The effect of this is that in a total loss - for example, if the property burned down - your under-insurance could result in a settlement which was less than the amount needed to rebuild the house.

The market value of your home is no guide as to the amount you should insure it for. The sum insured must be based on the full rebuilding costs including central heating, double glazing, kitchen and bathroom fittings and so on, as well as the cost involved in demolition, clearing the debris, paying fees to professionals and so on.

Your insurer, or insurance intermediary, will provide you with a guide to working out how much cover you need - and an intermediary should be willing to do the calculation for you. There are also two free leaflets:

A Guide to Buildings Insurance from: Royal Institution of Chartered Surveyors

Buildings Insurance for Homeowners from: Association of British Insurers

These give examples of rebuilding costs for all kinds of properties (detached, old, new, big, small and so on). However, these figures give only what is described as a 'reasonable' guide. If you have a particularly large property, or if it has an unusual feature such as a thatched roof or a round tower, consult one - or preferably two - professional surveyors for a written estimate of the rebuilding costs.

If you have a mortgage, the lender will normally ask the surveyor to give an estimate of the rebuilding cost and the lender will then insist that you're insured for at least that amount.

Whatever figure you decide to insure for, it's important to make sure it's 'index-linked'. This means that the sum is automatically increased each year to keep pace with increased costs of house building. This won't take into account any increase in value in your home due to adding on an extra bedroom, say, or installing central heating. Report any changes like this to the insurance company.

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What influences cost?

The cost of the insurance depends on the rebuilding cost of your property (seep. ). The main influences on rebuilding cost are the type of home you have - flat, detached house, bungalow, and so on - the age of the property, its size, and whereabouts you live (because building costs vary from area to area).

One or two companies provide insurance cover based on the size, age and location of the property rather than on rebuilding costs.

Points to note

- If you leave your home unoccupied for more than a set period of time (usually 30... see: House Buildings Insurance Continued

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