The Full Spread Blueprint Layout: Insurance for Buildings

TLTR: This article explores whether you need to get insurance for buildings, what building insurance covers, what you need to consider while choosing building insurance, and suggests ways to decrease premium costs.

A building is more than just a structure. For many, it’s also a source of income and livelihood. Any damage to a building can cause a heavy financial strain for the owner.

As the owner of a building, you need to make sure that your building is, first, well maintained, and second, well protected if it’s somehow damaged. By acting as a financial safety net, building insurance can help you mitigate some of the strain that can arise from costly damage.

What is Building Insurance?

Building insurance covers the actual brick and mortar of your building. It helps cover the cost of repairing damage to the building structure, including most of its permanent fixtures.
Depending on the policy you choose, it’s coverage also extends to garages, sheds, and fences, and can cover the cost of repairing or replacing pipes, drains, and cables.

As long as the structure or its permanent components is damaged by a covered event or a covered peril, your insurance company will compensate you with the agreed-upon payout.

Note: Structures such as swimming pools aren’t typically covered. But you can add them to your policy for an added cost.

If you want to cover any freestanding appliances and decorative items like carpets and drapes, you’ll need to get separate contents insurance. To be on the safe side, it’s always good to check the details of your policy to confirm the extent of the coverage.

Who Needs Building Insurance?

Whether or not you need building insurance depends on several factors. You’ll need building insurance if…

If you own your house or building in full and don’t have a mortgage on it. Under those circumstances, there’s no legal requirement for you to have any insurance for a building. But it’s vital to understand that the cost of repairs to your building can be very expensive out of pocket. Getting building insurance will help you save a lot of money in the long run. And it will give you peace of mind into the bargain.
If you’re a homeowner with a mortgage, your lender is likely to insist that you have appropriate and adequate insurance for the building, at least till the remainder of the mortgage term. As your lender still has a stake in the property, they will want to ensure that it’s well maintained and protected under your tenure. You will also typically need to already have building insurance the day that you sign the exchange contracts, as this is when the property’s legal responsibility is passed on to you.
If you’re a landlord of the building, you own the structure and are responsible for any repairs it might need. Thus, building insurance can cover almost all applicable costs.

Who Doesn’t Need Building Insurance?

If you’re renting a building, then it’s the landlord’s responsibility to have the building structure insured. But building insurance will not cover your personal property. So, you might want to look into renters insurance if you want to make sure that your personal belongings are covered in case of any unforeseen event.

If you own a flat, the building that it’s a part of might already has the right insurance. However, it’s always a good idea to check to see if you need to get any coverage of your own.

What does Building Insurance cover?

Standard building insurance usually covers losses or damage resulting from:

• Fire, smoke, explosions,
• Floods, earthquakes, and storms
• Theft and vandalism
• Subsidence
• Frozen and burst pipes
• Fallen objects like lampposts, trees, satellite dishes
• Vehicle or aircraft collisions

Insurance Information Institute states that earthquake insurance premium is written rose from $3.5 billion to $3.1 billion in 2018.

Similarly, according to the Insurance Information Institute (III), 98 percent of land in the western states is already experiencing a drought which has brought the threat of wildfires a full month ahead of schedule.

So, getting the policy is probably in the best interest of people.

Note: Businesses can combine building insurance with commercial property insurance to further protect their belongings from loss, theft, or damage.

What are the Building Insurance Exclusions?

As with all insurance, building insurance has specific exclusions that you should know of. Furthermore, while the exclusions will vary depending on your insurance provider and the type of coverage you choose, some standard exclusions include:

• Firstly, general wear and tear
• Secondly, damage resulting from bad planning and workmanship
• Damage resulting from neglect and lack of maintenance
• Wind and storm damage to gates and plants
• Lastly, damage caused by pests and birds

Note: To get a full rundown of what your building insurance covers, find an agent.

What You Need to Know When Choosing Building Insurance

Not all building insurance policies are built the same or share the same features. Some of the most important things to consider while choosing the right insurance are:

The type of damage the policy covers

Most standard insurance will cover damage that resulted from natural disasters, subsidence, and fire. However, it’s important to understand that the coverage range that your policy provides can vary depending on your insurance provider.

It’s a good idea to always read your policy thoroughly. Some insurance providers allow you to add accidental damage coverage to your standard policy. Accidental damage coverage will provide you with financial protection for any mishaps like drilling a hole through a drainage pipe or slipping and putting your foot through a wall.

Temporary alternative accommodation

If your building is damaged due to fire, storms, or floods to the point that it’s impossible to live in, your policy covers the cost of living elsewhere while it’s being repaired. Make sure that you know exactly how much you’re entitled to under those circumstances.

No-claims discount (NCD)

Your insurance provider might look at you more favorably if you don’t make a claim on your building over a 12-month period. This may result in them reducing your premium.

See if the policy you choose has this feature available. If all things go well, you could save a considerable chunk of change in the long run.

Vacant properties

Make it a point to inform your insurance provider if your building will be vacant for any period of time. If your building is going to be left unoccupied for 30 days or more, special terms and conditions may be needed to keep the coverage valid.

Your insurance provider could refuse to pay out certain claims if you fail to inform them that your building was left unoccupied for a lengthy period.

How can I lower my Building Insurance in 2023?

There are a few ways you can lower the cost of your building insurance.

Compare Quotes

Perhaps the most effective way for you to lower your premiums is by first getting quotes from four or five different insurance companies. Make sure that you’ve received quotes for the same policies from the insurance providers and compare their features. See what they’re offering and compare the rates.

This will allow you to find the cheapest insurance that meets both your budget and your needs.

Bundle Your Insurance Policy

Insurance companies might offer bundles that combine two or more insurance packages. The upside of this type of insurance is that it almost always comes at a discount.

So, if you’re planning on insuring your building and want to ensure your car, see if your insurance company is offering a bundled package that combines the policies.

Pay Upfront

Paying your premium upfront is seen favorably by insurance companies. It also tends to be cheaper compared to paying in installments.

Check on Your No-claims Discount

If you’re lucky enough to have never needed to make a claim on your insurance, you could be eligible for a no-claim discount bonus. You usually only need to mention it in your insurance form, and the insurance company will handle the rest. Ask your insurance agent or provider for details.

Consult With Your Insurance Agent

You could take matters into your own hands and find the right insurance for you and your building, but it often comes at the cost of a lot of time, money, and effort. Certainly, your best bet at getting the cheapest insurance on buildings is by consulting with your insurance agent.

As a professional, an agent can assess your situation and offer you a list of the best insurance policies available for you to choose from.

You might also want to choose an independent agent since they can offer you quotes from multiple insurance companies rather than from a single insurance company, as in the case of captive agents.

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