Summary
Buildings insurance protects the physical structure of the home, while contents insurance protects possessions inside it. A freeholder usually needs to arrange buildings insurance. A leaseholder’s buildings cover is often arranged through the service charge, but this must be checked.
The rebuild cost is not the same as the market value. Rebuild cost is the estimated cost of rebuilding the structure if destroyed, including labour and materials. Market value includes location, land value and buyer demand. Insurance should be based on the correct rebuild cost, with contents valued separately. Excesses and exclusions matter because they determine what the household must pay towards a claim and what the policy will not cover.
Definition
Home insurance is financial protection against specified loss or damage. Buildings insurance covers the structure and permanent fixtures, while contents insurance covers personal belongings. The rebuild cost is the amount required to rebuild the property, while the market value is the sale value of the property on the open market.