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Buildings insurance is the one policy on this site that a mortgage lender will usually make a condition of lending. Not because it protects you, but because it protects their security on the property. That does not make it optional advice. It makes it the floor, not the ceiling.
UK insurers paid a record £6.1 billion in property claims in 2025, the highest annual total on record, according to the ABI. Payouts reached £1.5 billion in the final quarter alone, driven by adverse weather. Underinsurance based on rebuild cost is a recurring problem across the market. Some assessments put the proportion of underinsured UK properties at well over half. Standard policies also exclude gradual damage such as rot, pre-existing subsidence, and wear and tear, and often cap accidental damage unless it is added separately. Reading the policy schedule rather than just the premium is what determines whether a claim gets paid.
| Cover element | Included as standard | Usually needs adding |
|---|---|---|
| Fire, storm, flood, escape of water | Yes, on almost all policies | N/A |
| Subsidence, heave, landslip | Yes, though often with a higher excess of £1,000 or more | N/A |
| Accidental damage such as a DIY mishap through a wall | No | Yes, as an optional extra |
| Alternative accommodation while uninhabitable | Usually included up to a limit | Higher limits available for an additional premium |
| Trace and access (finding a leak) | Sometimes included, sometimes capped | Higher limits available |
| Rebuild cost vs market value | Cover is based on rebuild cost, but the figure entered is the policyholder's responsibility to get right | Professional rebuild cost assessment |
Run the numbers, then talk to us. Our financial calculators cover mortgage repayments, how much you could borrow, stamp duty, bridging finance and rental yield. Results are estimates only and should not be relied on as financial advice.
Most people arrange buildings insurance once and never look at it again. Here are four situations where the detail in the policy schedule matters far more than the headline premium.
Purchase price and rebuild cost are always different numbers. A property that sells for £550,000 in southeast London may cost £280,000 to rebuild from scratch. The purchase price includes the land and the location, neither of which needs rebuilding. If you insure for £550,000 when the true rebuild cost is £280,000, the average clause reduces any claim proportionally. In that example, by 49%. You carry the rest personally.
A kitchen renovation that adds £35,000 to the rebuild cost of your property changes your sum insured requirement by the same amount. Most homeowners declare the original rebuild cost at inception and never revisit it. A significant renovation not reflected in an updated rebuild figure means the average clause can apply to a claim that has nothing to do with the renovation itself.
Subsidence, heave, and landslip are covered as standard but almost always at a higher excess, typically £1,000 or more compared to the standard £100 to £250 on other claims. Pre-existing subsidence that was disclosed at inception is treated very differently from movement that was not disclosed. If there is any ambiguity, it is worth reviewing the policy before a claim makes that conversation necessary.
Buildings insurance covers the structure: walls, roof, floors, and fitted fixtures. A boiler that breaks down is a maintenance matter, not an insured event, unless it is directly tied to something like a storm or escape of water. Home emergency cover is a separate product entirely. Most people find this out at 10pm on a January evening when the insurer’s claims line explains what the policy does and does not include.
Speak to an adviser to discuss your circumstances and explore how bridging finance could work for you.
A three-bed semi in southeast London suffers significant water damage after a burst water main next door. The buildings sum insured was set at the property’s market value, £520,000, rather than the RICS rebuild cost of £280,000. That is the number the owner remembered from the estate agent listing. The claim is paid, but under the average clause, which reduces the payout proportionally when the sum insured exceeds the actual rebuild cost. The reduction in this case is 46%. On a £110,000 repair bill, the insurer pays £59,400. The owner covers the remaining £50,600 personally.
Same flood. Same property type. Same damage. The rebuild cost was assessed properly at the point of purchase using a BCIS calculator, and the sum insured was set at £280,000. The average clause never applies because the sum insured was correct from the start. The £110,000 repair bill is paid in full, minus the standard excess. The difference between the two outcomes was a 15-minute calculation at the point of taking out the policy.
Clear,honest answers to the questions we hear most from clients and introducers.
Rebuild cost and purchase price are different numbers. A property selling for £550,000 in southeast London may cost £280,000 to rebuild from scratch. The purchase price includes the land, the location and the market, none of which need rebuilding. Insuring for £550,000 when the rebuild cost is £280,000 does not give you extra cover. It can trigger the average clause, reducing a claim proportionally based on the relationship between the stated sum insured and the actual rebuild cost.
Standard buildings cover includes fire, storm, flood, subsidence and escape of water. Accidental damage—the kind caused by DIY mishaps, drilling through a pipe or putting a foot through a ceiling—is not included on most standard policies. It needs to be added as an optional extra. Checking your current policy schedule to confirm what is and is not included takes a few minutes and can determine whether a claim you thought would be covered actually gets paid.
A substantial renovation changes the rebuild cost of your property. An updated kitchen, an extension, or a loft conversion can all increase the amount it would cost to rebuild. If the rebuild cost has gone up and your sum insured has not, the average clause can apply to future claims even when the claim has nothing to do with the renovation. Telling your insurer when the work is complete and updating the rebuild figure helps prevent a shortfall you might only discover when making a claim.
Buildings insurance is required by most mortgage lenders from exchange of contracts, not completion. You can become legally responsible for the property from exchange, even if you have not yet moved in. Arranging cover from the completion date rather than the exchange date can leave a gap. A broker can arrange cover from the correct date, including chain-dependent scenarios where completion might be delayed.
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