Buildings and Contents Insurance

Building and contents insurance refers to insurance expenses paid to cover your building or structure and your household's contents.

Building insurance in detail

Building insurance is paid for covering against any potential losses to permanent structures such as walls, roof, and floors and to added fixtures like kitchens and bathrooms. This insurance safeguards you from any loss to your property by natural events, fire, falling trees, damaged caused by water leaking out of pipes, leakage of oil from heating systems, etc. Some policies may also cover external walls, driveways, and fences. As per 2012 government data, the average household spends £2.50 per week or £130 per year on buildings insurance. As per the Association of British Insurers (ABI), in 2012, out of the total 26.4 million households in the UK, nearly 17.0 million or roughly 64% had building insurance.

Contents Insurance in detail

Contents Insurance refers to insurance for covering your household s contents such as belongings, electronic goods, jewellery, clothing, and furniture, etc. Typically contents insurance will cover against any losses caused by theft, fire and flood. As per official data, in 2012 the average household paid £2.40 every week or around £125 per year on contents insurance. According to ABI, in 2012 nearly 20.2 million households or around 77% of the total households in UK had contents insurance.

Typically, people go for a combined building and contents insurance as this results in a lower premium. Note that unlike car insurance, building and contents insurance are voluntary. Though in some cases, mortgages may make it compulsory to take building insurance.

Example 1:

Sainsbury's Bank is offering a combined building and contents insurance. For building, you can choose either from an unlimited cover or a limited cover of up to £1 million for buildings. The unlimited cover will have a higher premium. For contents, the insurance covers losses of up to £100,000 with a maximum limit of £4,000 per valuable. Any loss above £100,000 or loss to any item worth more than £4,000 is not covered under this insurance. The insurance includes any loss or theft to keys and covers expense incurred on alternative accommodation in case of a major loss to the building.

Sainsbury's Bank is offering a discount of up to 20% if the insurance is purchased online, and a 30% discount if you have not claimed any insurance for the past five years. An additional discount is available to holders of Nectar card and consumers of Sainsbury s car loan.

Common Causes for Claims

Out of the total claims within buildings and contents, the most common causes are:

1. Escape of water (24%)
2. Weather (24%)
3. Theft (14%)
4. Fire (13%)
5. Other domestic claims (12%)

Useful Tips:

• Building insurance is needed only for homeowners and landlords; it is not needed for those living on rent as the insurance is paid by the homeowner.
• Content insurance is needed for everyone irrespective of whether you own or rent the property.
• Ensure you value all household items, big and small, properly to ensure adequate coverage for contents.
• You should refrain from automatically renewing the policy upon end of the term, especially if you have had no claims in a given year. It is possible that another company may offer you a better deal such as higher cover or lower premium.
• Check prices by different providers on comparison websites like Confused.com, MoneySuperMarket, and GoCompare.

Use our household budget calculator to analyse how your spending on building and contents insurance is affecting your overall household budget.