When the walls come down

Want to insure your house but don't know where to start? Richard Phillips guides you through the maze and magnifies - and explains - the small print
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The Independent Online
BUILDINGS insurance is one of the most important policies you will buy, yet in the melee of moving, choosing the best policy can become a low priority. Compared with a mortgage, a few hundred pounds per year for your insurance premium can seem like peanuts, but it mounts up. And when a crack appears in your kitchen wall or your roof falls in, and your insurer waves small-print in your face to explain why he's really not liable, you'll wish you'd put more time and energy into choosing a policy.

WHAT IT'S FOR

Buildings insurance is designed to insure the structure and permanent fixtures, such as the toilet and kitchen sink, and usually any outbuildings, against fire, falling trees, the impact from cars or lorries crashing into the property, flooding and water damage, subsidence, and criminal damage. You are also covered for liability if, for example, a roof tile falls off your house, and damages the building next door.

Watch out for exclusions: these are the things your policy will not cover, and you need to read the small print to make sure any special requirements are met. Some policies will not, for example, cover outside walls, fences, or swimming-pools. Many insurers do not cover against contamination from nuclear radiation: the actuaries have decided it's not worth providing. If this is of particular concern to you, then you will need to raise it specifically with your insurer.

PREMIUMS

Because buildings insurance policies are pretty standard these days, there is little difference between one insurer and another. But whereas premiums even a decade ago were very similar region to region, the differences now can be dramatic.

Much of this is due to subsidence. There was a huge rise in claims for subsidence during the late Eighties following a spell of long, hot, dry summers. Subsidence is far more prevalent in the south-east and thus premiums have risen there. In Aberdeen, the city of granite, by contrast, it is unheard of. Rising crime rates are also a problem as buildings insurance covers the cost of damage by burglars to your property. Premiums have risen, as a result, in inner city and urban areas .

Rates start at around 14p for every pounds 100 of insurance taken out; the most expensive policies cost around 40p per pounds 100.

INSURED VALUE

It is crucial that your property is insured for the complete cost of rebuilding should it, for example, be so badly gutted by fire that it is beyond repair. If your property would cost pounds 30,000 to rebuild and your insurance policy is only for pounds 20,000, you will be faced with the shortfall. Don't be tempted to scrimp. Note that the price you paid for the property is irrelevant when it comes to working out how much to insure the building for (see feature opposite for more on this). You may buy a home in need of repair and the work you put into it will raise its value considerably and you will have to work out how much rebuilding would now cost. Likewise, if your property is listed, rebuilding to a similar standard may cost more than the original purchase price.

Again, there are regional differences: the cost of builders, architects and surveyors is less in the provinces than in London. Most insurers provide guidelines to work out the cost of buildings insurance.

Remember, too, that if your house is destroyed, you will need temporary accommodation while it is rebuilt. Your policy should provide for this. Check.

HOW TO REDUCE YOUR PREMIUM

There are several ways to reduce the cost of your policy. Installing a smoke alarm usually earns Brownie points, as does having good security measures in place, especially if you live in an area with a high burglary rate.

Some insurers will offer a discount if you take out home contents insurance and buildings insurance together. Excess charges can make a significant difference. Excess is the amount you have to pay towards the cost of a claim. If you agree to pay out the first pounds 500 of any claim, rather than the standard level of pounds 100, then the cost of the policy comes down substantially. But that may cut against the idea of taking out insurance in the first place. You will need to calculate what level of excess you are comfortable with.

Make sure you maintain your property. Have your roof checked each year, make sure the guttering is kept clear, and keep a record of receipts, and so on, of any work you have done so you have proof if the insurer claims you have been negligent in maintaining the property.

Finally, shopping around every year for the cheapest policy may prove counter-productive. Most insurers offer a no-claims discount, which will lower the cost each year, if you have not made a claim. And you will build a relationship with the company, however tenuous, which can provide for some useful goodwill at a future date.

INSURANCE TIPS

Make sure you get a range of quotes from at least three insurance companies, and compare the small print in their policies.

Check the offers the companies have on no-claims discounts and the like, and any other offers they may make, such as cheaper insurance if you combine the policy with your household contents cover.

Make sure you obtain at least one quote from a telephone-sales insurer, such as Direct Line which has recently launched a buildings policy. They are often cheaper than the established insurers.

When you calculate rebuilding costs, it may make sense to use a professional surveyor if the house has unusual features, or would be a challenge to rebuild for any reason.

Keep a record of your own maintenance work, including receipts, as proof that you have not neglected the building.

Try to stick to the same insurer once you have made your choice.

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