What's the difference between buildings and contents insurance?

What's the difference?

Having home insurance in place is vital to make sure you’re have cover in case of an emergency and it also helps to make sure that you can cover the cost of repairing your home or replacing your belongings.

You can buy a combined building and contents policy with most UK insurers, or you can purchase the policies individually.

But what is the difference between building insurance and contents insurance? And do you need both?

What is buildings insurance?

Buildings insurance covers the main structure of your home, which includes walls, floors, fitted kitchens and bathrooms and any other permanent fixtures and fittings. A good general rule is if you move out, anything you leave behind would be classed as buildings.

Buildings cover often extends to outbuildings, greenhouses and garages, but it is worth checking with your policy provider first.

Although buildings insurance isn’t mandatory, most mortgage lenders ask that you have it in place before you exchange contracts, and your solicitor is likely to as for proof of cover. A buildings insurance policy would fund the cost of repairing any damage to the structure of your home caused by an insured event and would cover the cost of rebuilding your home in the event of complete damage.

How much building insurance do I need?

To work out how much buildings cover you need, you need to make sure you insure yourself for the amount it would cost to completely rebuild your home, NOT what you paid for it or its current market value.

You should regularly review your buildings insurance as rebuild costs may rise over time, and if you have improved your home by adding an extension or loft conversion, the rebuild costs are likely to have increased.

What is contents insurance?

Contents insurance covers most of the things that you have in your home. If you imagine turning your house upside down, anything that would fall out is generally covered under contents insurance. Typical items would include electronics such as TVS, laptops, any furniture and even clothes.

It is worth checking with your provider that your policy includes cover for any garden equipment that lives in your shed, if needed.

How much contents insurance do I need?

It’s important to make sure you have enough cover to protect what you own. As a homeowner or a tenant you should know roughly the value of your contents every year. If you estimate too low, you could find yourself underinsured. This could see you either being denied a claim or not receiving the full amount for the contents lost if you came to make a claim.

For example, if you made a claim and it was found that you had £50,000 worth of contents in the home, but you had only taken insurance to cover £25,000, you would be classed as underinsured. In this case, as you are only insured for 50% of the value, you would receive 50% of the claim value and you would have to find the rest of the money to replace all of your damaged contents.

Use our contents calculator to estimate out how much contents cover you need. Make a list of all your possessions and figure out the cost of replacing them with new or like-for-like items and total the amount. People are often surprised at how much their contents are worth.

How to choose the right home insurance policy

When shopping around, you need to make sure that the buildings or contents insurance policy has enough cover for your home and is within your budget.

With so many options in the market, it’s important to compare home insurance policies for the amount you’ll be covered for and any exclusions. Remember, the cheapest policy is usually not the best option.

Although what falls under buildings and contents may seem straightforward some parts may be harder to define. For example, carpets are more likely to be considered under contents insurance, laminate flooring would be buildings.

We recommend speaking to a financial advisor who can be on hand to offer you any support.

Explore our Home Insurance page to learn more about Paymentshield’s buildings and contents insurance and the benefits they have.