Building Insurance vs Home Insurance: What’s the difference
Ever wondered what the difference is between building insurance vs home insurance? It’s essential that you’re able to distinguish between the two to make sure your home and contents are properly protected — especially if you’re a homeowner.
In this article, we’ll guide you through the key differences between building insurance and home insurance, as well as covering things like contents insurance, landlord’s insurance and more. Let’s get started.
Is building insurance the same as home insurance?
In a nutshell — no, building insurance is not the same as home insurance.
Building insurance (sometimes called ‘buildings insurance’) specifically covers the actual structure of your building (as well as any permanent fixtures and fittings).
A ‘fixture and fitting’, by the way, refers to something that cannot be removed from your home without damage, for example — a fitted kitchen or bathroom. In general, these sorts of things are covered by buildings insurance, rather than contents insurance.
‘Home insurance’, in contrast, is more of a catch-all term. For example, a home insurance policy might include both contents and building insurance – but it all depends on the exact wording from the insurer.
That’s why it’s important to check that your chosen home insurance policy provides adequate cover before taking it out. Remember, if you’re a homeowner, you’re responsible for insuring both the contents and the structure of your home. This means that you’ll want to make sure you have both building and contents insurance in place (either separately or under one home insurance policy).
Is building insurance worth having?
No surprises here — at Howden, we recommend that building insurance for homeowners is a sensible idea.
The damage to your home from fire, flood or other unforeseen event can be devastating, both emotionally and financially, so should the worst happen, you’ll want to know that you’re covered. And if you’re a landlord, then it’s your responsibility to keep the building in good working order from a legal standpoint.
So even though having building insurance isn’t mandatory by law (for any homeowner, including landlords) it makes financial sense.
Is home insurance the same as contents insurance?
Again — no. Home insurance is not the same as contents insurance. Although a home insurance policy may include contents insurance.
Contents insurance tends to cover items that can be removed from your home, such as appliances, furniture and clothing. Generally, contents insurance protects against damage from things like theft, flood and fire — but It’s always worth checking the terms of your individual policy. Be aware that accidental damage doesn’t tend to be included in standard contents insurance policies but you can usually add this on.
Contents insurance is a good idea for most homeowners. But if you’re a landlord of an unfurnished property you might decide that contents insurance isn’t worth buying, as the responsibility of your tenant to insure their own possessions.
If this is the case, it’s still worth considering any essentials that you might supply with your rented property before deciding you don’t need contents insurance. These might include things like kitchen appliances, curtains and carpets as these items aren’t covered by building insurance. In the end, you might decide that the long-term financial protection that comes with contents cover makes the initial outlay worth it.
Do I need building insurance to buy a house?
Legally, no — you don’t need building insurance to buy a house. But mortgage lenders often make having building insurance in place part of their conditions for sale.
The reason for this is straightforward – your property acts as collateral for the loan secured for your mortgage, so it’s in your lender’s interest to make sure the property is suitably insured.
As well as building insurance, we would recommend considering other types of protection, such as life insurance, critical illness insurance, income protection and mortgage protection when buying a house.
What’s the difference between landlord insurance and building insurance?
Whilst being any sort of homeowner comes with a whole host of things to think about, being a landlord is a whole different ball game. Rent arrears, damage to the building or contents by tenants, the risk of your tenant being injured in your property … the list goes on.
It’s no wonder, therefore, that many insurance providers provide special cover for landlords.
So, although landlord insurance isn’t a legal requirement, it’s a great way to protect your investments and income as a landlord.
The precise cover that a landlord insurance policy provides can vary, but typically includes:
Landlord’s buildings insurance: Building insurance that covers damage or destruction to your property due to fire, flood, theft or vandalism.
Landlord’s contents insurance: Cover for contents that have been destroyed, damaged or stolen.
Rent guarantee insurance: Mitigates the costs should a tenant fail to pay their rent over a period of time.
Property owners’ liability insurance: A type of public liability insurance that specifically caters for claims arising from the use of your property.
Unoccupied property insurance: Cover that specifically covers your property if left unoccupied for extended periods.
Landlord insurance offers more compared to more ‘bog-standard’ building and contents insurance policies. For example, a typical home insurance policy won’t cover you when your property is unoccupied for extended periods of time.
Unsurprisingly, having these extra bells and whistles usually means that landlord insurance will set you back more than standard home insurance. But in the end, you might decide that the extra peace of mind is worth it.
Are there other types of home insurance available?
Absolutely.
Insurance providers are well aware that their customers will want to insure their contents and buildings differently depending on their circumstances. This means there are a wide range of policies available on the market.
These include:
Tenants’ insurance.
Student contents insurance.
Holiday home insurance.
Listed building insurance.
The list doesn’t end there! So always do your research (or enlist the help of a specialist insurance broker) to make sure you’re getting the right cover for your needs.
What should I look for when buying home insurance?
With the amount of choice on the market, you might find yourself somewhat overwhelmed when it comes to picking a home insurance policy.
Here are a few benefits to look out for:
Alternative accommodation cover. Financial assistance if you need alternative accommodation because your property has been damaged.
Cover for accidental damage. Damage to things like furniture, fixtures, fittings and windows isn’t always covered when it happens by accident.
Cover for damage due to burst pipes or water tanks. Check your policy covers damage due to the escape of water.
Index-linked cover. It’s a good idea to buy a home insurance policy that covers the likely increased cost of building materials over time.
Excess amount. Ensure that you understand (and are willing to pay) the stated excess should you need to make a claim.
No-claims discounts. Take a look for discounts for not making a claim — they could save you money on your premiums in future.
Be aware that a lower excess (whilst beneficial should you need to make a claim) is likely to make your premiums more expensive. And cover for accidental damage, which often comes as an optional extra, will drive up the cost of your premiums too.
Summing up: Building vs. home insurance
Despite sounding similar, building and home insurance aren’t the same things.
Building insurance covers the structure of your home (including any permanent fixtures and fittings) against things like fire, flood and vandalism. For this reason, building insurance usually needs to be in place before a mortgage lender will approve your application — but it’s not a legal requirement.
Home insurance, which is more of a general term, might include both building insurance and contents insurance. Contents insurance tends to cover items that can be easily removed from your home, such as furniture, appliances and clothing.
Most homeowners are going to need building and contents insurance, so if you have an overall home insurance policy, check it covers both. However, some house owners, such as landlords of unfurnished properties, may choose to do without contents insurance.
Whatever your circumstances, it’s essential that you get the right cover for you. But thankfully, there are loads of options to choose from. From specialist holiday home insurance to tenants’ insurance and student contents insurance — you might be surprised at what’s on offer.
At Howden, we’ve got plenty of home and contents insurance policies to choose from — including those listed above. And, because you’ll have our specialist team of insurance experts on hand, you can rest assured that you’ll find the cover that’s the best fit for you — whatever life looks like!
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