Buildings vs Contents insurance
UK home insurance splits into two distinct products, often sold together as a combined policy:
Buildings insurance
Covers the physical structure of your home - walls, roof, floors, windows, fitted kitchens and bathrooms, permanent fixtures, and external structures (garages, outbuildings). Required by most mortgage lenders. Covers fire, flood, storm, subsidence, escape of water, and impact damage. Does NOT cover contents, general wear and tear, or deliberate damage by you.
Contents insurance
Covers everything inside your home that would "fall out" if you turned it upside down - furniture, electronics, clothing, appliances, jewellery, and personal possessions. Covers theft, fire, flood, and accidental damage (on enhanced policies). Does NOT cover the building itself, items left outside, or possessions above the single-item limit without being separately listed.
If you rent, your landlord's buildings insurance covers the structure - not your belongings. You need your own contents insurance. Renters' contents insurance is typically cheaper than homeowner cover (no building to insure) and can be arranged monthly. Your possessions are not covered under the landlord's policy.
What Buildings insurance Covers
Buildings insurance covers damage to the structure from specific listed events. Standard UK cover includes:
- Fire, explosion, smoke
- Storm and flood (though some high-flood-risk properties may face exclusions or high premiums)
- Escape of water (burst pipes - one of the most common claims)
- Subsidence (ground movement causing structural damage - check your policy carefully, as some older policies or high-risk areas have limits)
- Impact (vehicle hitting the house, falling trees or aerials)
- Theft or attempted theft (damage to the building during a break-in)
- Malicious damage by third parties
Rebuild value vs market value: Buildings insurance should be based on the rebuild cost - what it would cost to demolish and rebuild your property from scratch - not the market value. In many areas, particularly London, market value far exceeds rebuild cost. Over-insuring wastes money; under-insuring means claims may be proportionally cut. Use the ABI's rebuild calculator at abi.org.uk to estimate yours.
How to Value Your Contents Correctly
Under-insurance is one of the biggest home insurance mistakes. If your contents are insured for £20,000 but the true replacement value is £40,000, an insurer can apply the "average clause" - cutting any claim proportionally. A £10,000 theft claim might only pay out £5,000.
Go room by room and estimate replacement cost (new for old) for everything:
| Room | What to Include | Common Underestimate |
|---|---|---|
| Living room | Sofa, TV, sound system, furniture | Forgetting curtains, rugs, ornaments |
| Kitchen | White goods, crockery, small appliances | Forgetting fridge-freezer, dishwasher, microwave |
| Bedroom | Bed, wardrobe, clothing, jewellery | Under-valuing clothing and jewellery |
| Office | Laptop, PC, printer, books | Work equipment above limits, specialist gear |
| Garden | Garden furniture, tools, bikes | Often excluded or severely limited outside |
Most policies include a single-item limit (typically £1,000-£2,000). Items above this - jewellery, watches, cameras, musical instruments, expensive bikes - should be listed separately (specified items) to get full cover. Failing to list high-value items often means claims for them are limited or turned down.
How to Reduce Your Premium Without Losing Cover
Shop the whole market at renewal
Loyalty rarely pays in insurance - renewal quotes are typically higher than new customer rates. Use comparison sites (Compare the Market, GoCompare, MoneySuperMarket) every year. Switching on renewal is one of the fastest ways to cut your premium.
Increase your voluntary excess
Your excess is the amount you pay per claim. Raising your voluntary excess reduces your premium. Only do this if you could genuinely afford the total excess when you need to claim.
Improve home security
Approved locks (BS 3621), burglar alarms, and security lighting can reduce premiums - particularly for contents cover. Some insurers offer specific discounts for accredited security products. Tell your insurer about any improvements you've made.
Pay annually, not monthly
Monthly payments effectively add 10-25% APR interest to your premium. Paying annually is almost always cheaper.
Don't over-insure
Insure for actual rebuild cost (not market value) and actual contents replacement cost (not a round number). Both over-insuring and under-insuring cost you money in different ways.