Property

Building vs content insurance

Valentina GolubovicValentina Golubovic
Last updated on:
June 22, 2022
Published on:
June 22, 2022

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Home insurance is important because it protects you from financial loss in the event of a disaster or theft. This can be especially helpful when you own multiple properties since it gives you peace of mind knowing that you'll be covered in case anything goes wrong with one of them.

What is home insurance?

Home insurance protects your home and belongings against things like loss, damage, and theft. It is periodic payments for membership with a firm which compensates you in the event of financial loss or damage.

What is buildings insurance?

Buildings insurance (or buildings cover) concerns the 'shell' of the property (or the building's permanent fixtures). Buildings insurance covers the cost of repairing damage to the structure of your property such as floor, windows, walls, bathroom and kitchen.

Buildings insurance usually covers loss or damage caused by:

  • fire, explosion (due to gas leak)
  • smoke
  • storms, lightning, flood
  • theft and vandalism
  • frozen and burst pipes
  • fallen trees, lampposts, aerials or satellite dishes
  • subsidence
  • vehicle or aircraft collisions.

What isn't covered

Wear and tear

Wear and tear damage is usually not covered in standard buildings insurance policy as it isn't a result of sudden or unexpected damage.

Damage caused as a result of neglect

Buildings insurance providers can often reject claims if they believe that the damage resulted from neglecting the property. If for example your roof was damaged due to a storm however the insurance company has reason to believe it was due to the lack of upkeep to the roof and a reasonably maintained roof would have withstood the impact, they can reject your claim as the storm merely brought light to a poorly kept roof.

Unoccupied homes

Certain buildings cover does not cover you if your home is unoccupied for longer than specified. This is because the longer your property remains unoccupied the more likely it is that it will suffer some sort of damage as a result of lack of maintenance or theft.

Damage caused by pests

Most buildings insurance won't cover you for damage caused by pests. Once again this is because they believe you should maintain your property to avoid this damage, for example, maintain hygiene and manage waste, seal off any gaps, clear rubbish and clean your home. They do however tend to cover you for any damage caused by wild animals. You can often have an add-on to your current buildings insurance cover to include damage from pests.

Damage caused by tradesmen

It is unlikely that your buildings insurance policy will cover you for any damage caused by workmen. It is advisable that you complete the necessary checks on trading companies and ensure they are credible and have good reviews prior to letting the do work in your home. In the event you are in dispute, check your policy if you have legal expenses cover as this can often reimburse you for any legals fees.

What is content insurance?

Contents insurance covers the kernel of the property, such as its contents and possessions, like televisions, furniture and clothes in the event of loss, damage or theft.

What is covered

  • Jewellery and watches
  • Technology – TVs, phones, tablets, laptops, games consoles etc.
  • Appliances – fridges, freezers, microwaves, washing machines, dryer etc.
  • Furniture – sofas, bed, tables, chairs, bookcases, wardrobe etc.
  • Furnishings – carpets, curtains, cushions
  • Clothes
  • Ornaments and antiques
  • Cash and important documents
  • Expensive recreational equipment

What isn't covered

Wear and tear

Contents insurance cover damage to your contents as a result of using the items over a period of time. Home insurance cover is supposed to protect you from sudden damage, whereas wear and tear is gradual deterioration that happens over time.

Tenants possessions

As a landlord, your contents insurance does not extend to your tenant's possessions. If they wish you to insure their possessions they will need to take out separate contents insurance cover to protect their belonging against damage or theft. It is important to remember that even if you let out your property unfurnished, you may still want to consider contents insurance for things like carpets, appliances and any other furnishings.

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Benefits of having a landlord insurance policy

Landlord liability insurance is vital as landlords owe a duty of care to anyone living in the rented home. Liability insurance will cover landlords if a tenant or a visitor is injured on their property. This could result from a tenant tripping over loose flooring and falling downstairs. In response to such an accident or legal costs, the compensation requested could cost landlords a considerable amount. Furthermore, if you only have standard home insurance and your provider is not aware you are letting out your home, it can lead to your insurance being invalidated, and you will be forced to pay a hefty bill. In conclusion, having liability insurance as a landlord cover expenses if you’re taken to court because of your property.

By law, landlords must keep their properties to specific standards when renting including gas and electrical safety. The Queen's speech on May 10th outlined the government's plans to introduce a property portal that may be used for reporting repairs by tenants and extending the Decent Homes Standards to the private sector. Staying on top of all the necessary repairs can be costly, and in the event of weather or water damage, it can add unnecessary costs which the landlord is required to pay. Having landlord buildings insurance would allow landlords to claim against it in the event of any burst pipes and therefore save money.

If you are letting a furnished property, there is a risk of damage to your contents. Contents of your home include; any furniture, carpet, appliances and more. Repairing or replacing any contents can be costly, especially if you have many properties. You can protect these items in your home with content insurance and save yourself unnecessary expenses.

You can get covered for any unpaid rent through rent guarantee insurance, a type of landlord insurance cover that reimburses landlords for any rental income if your tenant defaults. Renting out your home is a business and losing out on rent due to tenants defaulting is something you can protect your income against.

While it's not a legal requirement to have an insurance policy, there are benefits, and if you are a landlord, your risk of damage increases. Therefore, it's essential to protect yourself against any financial loss.

Things to consider…

Policy exclusion

The exclusion clause in an insurance policy refers to hazards, perils or circumstances not covered by the policy. Make sure you are aware of what is excluded to avoid disappointment. Common things which are in the excluded from the policy cover are:

Costs

How much landlord and tenant insurance policies cost depends on what level of cover an individual chooses, such as whether they choose basic or premium coverage and whether they include any optional extras, such as legal expense cover, in their policy.

Landlord Insurance costs can be estimated by obtaining landlord insurance quotes from some of the big providers. Tenant insurance costs can also be calculated online and additional cover options can be taken into account.

To reduce the cost of your insurance, you might want to consider paying annually for your insurance, such as on a debit or credit card; choosing a policy with a higher premium, or; considering what add-ons you can remove from your building or contents insurance policy.

Things which affect your insurance

Number of claims you make

The chances of your insurance premium going up at the next renewal date increases the more claims you make. the type of claim you make can also have an impact.

Type of tenant

There can be many types of tenants for example:

  • Students (from the UK or international)
  • Employed (full or part-time)
  • DSS
  • Unemployed
  • Asylum seekers

The type of tenant living in your property may have an impact on your insurance. For example, DSS tenants are seen as riskier tenants compared to those in full-time employment because they rely on government support for housing benefits and are therefore more likely to be late with rent payments due to an unexpected bill or in times of financial difficulty. As a result, some insurers won't provide cover for DSS tenants for this reason.

Student tenants can impact insurance due to the lack of responsibility associated with the youth resulting in a higher premium. Like DSS tenants students are also seen as financially disadvantaged compared to tenants in full time employment.

Tenancy Checks

Most landlords or letting agents conduct tenancy checks prior to renting out a property. Tenancy checks include identity checks, referencing checks and credit checks. This is to see if the tenant is able to pay the rent on time, if they are legally allowed to rent that property and if they have any unspent criminal convictions. You're not legally required to check if your tenant has a conviction. However, many insurance providers insist you inform them if anyone with a conviction is living in the property.

Location and age of property

The location of the property can increase your premium. If your property is in an area of high crime the risk of theft increases. Similarly, old properties can be seen as riskier as they are likely to suffer damage. 

What to do next?

Visit Pikl to obtain a quotation in just a few minutes. Alternatively, you can call the Pikl team on 0800 254 5171 quoting Legislate Technologies Limited. 

Please make sure you carefully read all of the insurance documents you are provided with, so that you understand what cover the policy provides, including any exclusions and limitations.

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