Buildings vs Contents Insurance: What Each Covers

Two completely different policies protect two completely different things. Buildings insurance protects the bricks, mortar and permanent fixtures of your home, the lender insists on it because it's protecting their security. Contents insurance protects your possessions inside. Buyers often confuse them or assume one covers the other. They don't.

Buildings insurance, what it covers

Buildings insurance covers the physical structure of your home: walls, roof, floors, doors, windows, permanent fixtures (fitted kitchens, bathrooms, boilers, central heating) and external structures (garages, sheds, garden walls, driveways). Typical covered perils include:

• Fire and explosion
• Storm and flood damage
• Burst pipes / water escape
• Subsidence, heave or landslip
• Vehicle and aircraft impact
• Theft and vandalism damage to the structure
• Falling trees / accidental damage (usually optional add-on)

Why buildings insurance is mandatory if you have a mortgage

Your mortgage lender's security is the property itself. If the property burns down with no insurance, the lender's security is gone but the mortgage debt remains. To protect themselves, every UK mortgage lender requires you to maintain buildings insurance throughout the mortgage term, with cover at least equal to the property's rebuild cost.

Rebuild cost is NOT the same as market value. It's the cost to literally rebuild the property from scratch, typically 60-80% of market value for most UK homes (lower in expensive areas where land cost dominates the price). Your conveyancer or surveyor will confirm rebuild cost during the buying process.

Contents insurance, what it covers

Contents insurance covers everything inside your home that isn't part of the structure. Roughly speaking, if you could pick it up and take it with you when you moved, it's contents:

• Furniture, beds, soft furnishings, curtains, carpets (in some policies)
• Electricals, TVs, computers, kitchen appliances (free-standing)
• Clothes, shoes, books, toys
• Kitchen contents, crockery, cutlery, food
• Garden tools, bikes (sometimes with separate limits)
• Personal belongings (jewellery, valuables, often with specific limits per item)

What contents insurance usually does NOT cover

Common exclusions to watch out for:

• Items worth more than the 'single article limit', usually £1,500-£2,500, unless specifically listed and additionally insured.
• Items outside the home, bikes, phones, jewellery worn out, unless you have 'personal possessions away from home' cover (usually an add-on).
• Cosmetic damage from general wear and tear.
• Damage from poor maintenance, burst pipes from frozen unlagged plumbing, for example.
• Business equipment, usually needs separate business insurance.

Combined vs separate policies

Most UK insurers offer combined buildings AND contents policies, usually a small discount vs buying separately. Reasons to combine:

• Slightly cheaper than two separate policies.
• One renewal date to manage.
• Single claim contact if multiple things happen at once (e.g. fire damaging both structure and contents).

When separate policies make sense

Combine is the default, but separate can be better if:

• Your buildings is covered by a landlord (e.g. leasehold flats where the freeholder arranges buildings insurance through service charges).
• You have specific high-value contents needing a specialist contents-only policy.
• You're a leaseholder, the freeholder usually arranges buildings insurance for the whole building and recharges through service charges. You only need contents.
• You want different excess/cover levels on each.

Leasehold flats, who pays for buildings insurance?

For leasehold flats, the freeholder typically arranges buildings insurance for the entire building and charges leaseholders through service charges. As a leaseholder, you don't directly buy buildings insurance, you confirm with your solicitor at purchase that the freeholder's policy is in place and adequate, then continue paying through service charges.

You DO still need your own contents insurance, that's separately yours to arrange.

How much cover do you need?

Buildings: rebuild cost, figure provided by surveyor or use the Building Cost Information Service (BCIS) calculator at rebuildcostassessment.com. Most insurers will accept their own assessment for standard homes.

Contents: walk through every room and write down what you own. The total is almost always higher than people guess. £30,000-£60,000 is typical for a 3-bed family home. Add 10-20% for forgotten items. Underinsurance leads to 'average' clauses cutting payouts proportionally.

Where this fits with mortgage protection

Buildings and contents are property insurance, they protect things. Mortgage life insurance and income protection are PERSON insurance, they protect you and your family from the consequences of death or illness. Both kinds of protection have their place; neither replaces the other.

Many people accidentally let their buildings insurance lapse at renewal because the lender doesn't routinely check. The first warning is usually a claim being declined when something goes wrong. Set a recurring calendar reminder to check renewal each year.

Buildings and contents insurance aren't glamorous, but they're the foundation of home financial safety. Get the cover levels right (especially rebuild cost), keep policies in force throughout the mortgage, and review every couple of years. If you're putting together a full protection picture, including life, critical illness and income protection, Debbie at DS Financial can help you assemble it without overpaying for things you don't need.

General information, not financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.

Sources: MoneyHelper, Home insurance, Citizens Advice, Home insurance, Association of British Insurers.