What is Property Owner Buildings Insurance?

Property owner buildings insurance is a specialized form of coverage designed to protect the physical structure of your property against various risks and perils. Unlike standard home insurance, this coverage is specifically tailored for property investors, landlords, and commercial property owners who need comprehensive protection for their building assets.

The insurance covers the actual structure of your building, including walls, roof, floors, fitted kitchens, bathrooms, and permanent fixtures. It's designed to restore your property to its pre-loss condition following covered damage, ensuring your investment remains protected.

Key Coverage Areas

Structural Damage Protection

Buildings insurance covers damage to the fundamental structure of your property. This includes walls, foundations, roof, floors, and load-bearing elements. Whether damage occurs from fire, storm, flood, or other covered perils, your policy will provide funds for necessary repairs or rebuilding.

Fixed Installations and Fittings

Your policy extends to permanent fixtures within the building, including fitted kitchens, built-in wardrobes, bathroom suites, central heating systems, and electrical installations. These elements are considered part of the building structure rather than contents.

External Structures

Coverage typically includes outbuildings, garages, sheds, boundary walls, gates, and driveways. For commercial properties, this might extend to car parks, external lighting, and landscaping features that form part of the property infrastructure.

Alternative Accommodation Costs

If your building becomes uninhabitable due to covered damage, buildings insurance can cover the cost of alternative accommodation for tenants or temporary business premises, helping maintain rental income and business continuity.

Common Risks and Perils Covered

Fire and Explosion

Fire remains one of the most devastating risks to any building. Your insurance covers damage from accidental fires, electrical faults, lightning strikes, and explosions. This includes smoke damage and the cost of fire service charges.

Weather-Related Damage

Storm damage, including wind, rain, hail, and snow, is covered under most policies. Flood damage, whether from burst pipes, natural flooding, or drainage issues, is typically included, though some policies may have specific flood exclusions.

Theft and Vandalism

Malicious damage and theft affecting the building structure is covered. This includes damage to doors, windows, locks, and other structural elements during break-in attempts or vandalism incidents.

Accidental Damage

Many policies include accidental damage cover for situations like accidentally putting your foot through the ceiling or driving into your own building. This optional coverage can be valuable for comprehensive protection.

Types of Property Owner Buildings Insurance

Standard Buildings Insurance

Basic coverage protecting against the most common perils including fire, theft, storm, and flood. Suitable for straightforward residential rental properties or simple commercial buildings.

Comprehensive Buildings Insurance

Extended coverage including accidental damage, legal expenses, and additional perils. Often includes higher coverage limits and more extensive protection for complex properties.

Commercial Buildings Insurance

Specialized coverage for commercial properties, including shops, offices, warehouses, and industrial buildings. Includes business-specific risks and higher coverage limits appropriate for commercial use.

Heritage and Listed Building Insurance

Specialized coverage for historic or listed buildings, including protection for original features, traditional building materials, and compliance with conservation requirements.

Factors Affecting Your Premium

Property Type and Construction

The age, construction materials, and architectural style of your building significantly impact premiums. Modern buildings with fire-resistant materials typically attract lower premiums than older properties with traditional construction.

Location and Risk Factors

Properties in high-risk areas for flooding, crime, or natural disasters will have higher premiums. Urban locations may face different risks compared to rural properties, affecting pricing accordingly.

Security Measures

Installing appropriate security systems, fire alarms, and protective measures can reduce premiums. Insurers often offer discounts for properties with approved security installations.

Claims History

Your previous claims history affects pricing. A clean claims record typically results in lower premiums, while frequent claims may increase costs or affect coverage availability.

Choosing the Right Coverage Level

Rebuilding Cost Assessment

Ensure your sum insured reflects the full rebuilding cost, not the market value of your property. Rebuilding costs can be significantly different from market value and may increase over time due to construction cost inflation.

Index Linking

Consider policies with automatic index linking to ensure your coverage keeps pace with building cost inflation. This prevents you from becoming underinsured over time.

Excess Levels

Choose an excess level that balances affordable premiums with manageable out-of-pocket costs in the event of a claim. Higher excesses reduce premiums but increase your financial exposure.

Additional Covers

Consider optional extras like legal expenses cover, rent guarantee insurance, or extended accidental damage cover based on your specific needs and risk profile.

Common Exclusions and Limitations

Maintenance and Wear and Tear

Standard policies exclude damage resulting from poor maintenance, gradual deterioration, or normal wear and tear. Regular property maintenance is essential to maintain coverage validity.

Flood Exclusions

Some policies may exclude certain types of flooding or require separate flood coverage. Check your policy carefully if your property is in a flood-risk area.

Vacant Property Restrictions

Many policies have restrictions or exclusions for vacant properties. If your building will be unoccupied for extended periods, inform your insurer to maintain coverage.

Business Use Limitations

Residential buildings insurance may not cover commercial use. Ensure your policy matches your property's actual use to avoid coverage gaps.

Making a Claim: What to Expect

Immediate Steps

Contact your insurer immediately after discovering damage. Take photographs, secure the property to prevent further damage, and keep receipts for any emergency repairs or temporary accommodation.

Loss Adjuster Assessment

For significant claims, insurers will appoint a loss adjuster to assess the damage and validate your claim. Cooperate fully and provide all requested documentation promptly.

Repair Process

Your insurer may have preferred contractors for repairs, or you may be able to choose your own. Ensure all work meets building regulations and any conservation requirements for listed buildings.

Settlement Options

Claims can be settled through repairs, cash settlements, or replacement. The method depends on your policy terms, the extent of damage, and your preferences.

Tips for Property Owners

Regular Property Inspections

Conduct regular inspections to identify maintenance issues before they become insurance problems. Address issues promptly to maintain your coverage validity.

Keep Detailed Records

Maintain records of property improvements, renovations, and maintenance work. This documentation can be valuable when making claims or updating your coverage.

Review Coverage Annually

Review your buildings insurance annually to ensure coverage remains adequate. Property values, rebuilding costs, and your circumstances may change over time.

Professional Advice

Consider consulting with insurance brokers who specialize in property insurance. They can help identify the most suitable coverage for your specific needs and circumstances.

The Cost of Being Underinsured

Underinsurance can have serious financial consequences. If your sum insured is insufficient, insurers may apply average clauses, reducing claim payments proportionally. For example, if you're insured for 80% of the rebuilding cost, you may only receive 80% of any claim payment.

Conclusion

Property owner buildings insurance is not just a legal requirement for mortgaged properties – it's essential financial protection for one of your most valuable assets. The right coverage provides peace of mind, knowing that fire, flood, storm, or other covered events won't destroy your investment.

Take time to understand your coverage needs, choose appropriate sum insured levels, and work with experienced insurance professionals to ensure your buildings insurance provides comprehensive protection. Regular reviews and updates ensure your coverage evolves with your property and circumstances.

Remember, the cost of adequate buildings insurance is minimal compared to the potential financial impact of being uninsured or underinsured when disaster strikes. Protect your property investment with comprehensive buildings insurance tailored to your specific needs.