Glossary: Buildings insurance
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.
When you take out buildings insurance, the fabric and structure of a property is not covered at the property’s market value selling price, but on the cost of rebuilding. The amount of cover you need should always include the cost of demolition (if needed), clearing the site, and architects’ and builders’ fees. Most insurers will ask if the property is of “standard construction” (which usually means brick walls with a tile roof), how many bedrooms it has and its configuration (detached, semi, terrace) and work the rebuilding costs from there. If you want an independent valuation for rebuilding costs, you need a surveyor rather than an estate agent.