Glossary · UK
What is Buildings Insurance?
Insurance covering the physical structure of a property, including walls, roof and fixtures, against damage from events such as fire, flood, storm or subsidence; usually a mortgage condition for homeowners.
Full Definition
Buildings insurance covers the physical structure of a property -- the walls, roof, windows, floors, and permanently fixed items such as fitted kitchens and bathrooms -- against damage or destruction from insured events, typically including fire, storm, flood, burst pipes, subsidence, and damage caused by falling trees or vehicles, subject to the policy's specific terms and any excluded perils. It pays out to repair or, if necessary, completely rebuild the property, so the level of cover needed is usually based on the rebuild cost of the property (which can differ significantly from its market value, since land value is excluded), rather than the price paid for it. Buildings insurance is a legal requirement for essentially all mortgage borrowers in the UK, since the lender has a financial interest in the property as security for the loan and will require adequate cover to be in place from the point contracts are exchanged; borrowers are free to choose their own buildings insurance provider rather than being tied to the lender's own policy, and shopping around independently often produces a cheaper premium than accepting a lender's default offer. Leasehold flat owners generally do not arrange their own buildings insurance individually, since the freeholder or management company typically arranges a single block policy covering the whole building, with the cost recovered from leaseholders through the service charge; buildings insurance is distinct from contents insurance, which separately covers a household's belongings inside the property rather than the structure itself, and many providers offer combined buildings and contents policies at a discount to buying each separately.