Buildings and Contents Insurance, Home Cover for Mortgages

What is buildings and contents insurance?

Buildings insurance covers loss or damage to the structure of your home and its permanent fixtures from insured events such as fire, storm, flood, escape of water, subsidence and theft-related damage; contents insurance covers your belongings inside the home, and optionally away from it. Buildings and contents insurance can be bought together as one combined policy or as two separate policies. The structure includes the walls, roof and floors, the fitted kitchen and bathroom and the other permanent fixtures. The policy wording sets what it pays for: the insured events, the exclusions, the excesses and the limits, including a limit on any single valuable item. Accidental damage, personal possessions away from home, legal expenses and home emergency cover are usually optional additions.

The two parts are sized differently. The buildings sum insured should be the home's rebuild cost, which is often very different from its market value. Setting it too low can reduce any claim, including a partial one. The contents sum insured is the full cost of replacing your belongings. Homes in flood-risk areas, listed or thatched homes, homes of non-standard construction and homes with a history of subsidence need insurers that will cover them. The owner of a leasehold flat usually needs contents cover only, because the freeholder insures the building.

Insurers, and the firms that arrange or advise on home insurance, are regulated by the Financial Conduct Authority. How policies are sold, renewed and administered falls under its Insurance: Conduct of Business sourcebook, known as ICOBS (FCA Handbook: ICOBS 1.1). This is insurance distribution, which has its own rules separate from the MCOB rules that apply to residential mortgages. When an insurer asks you questions before it offers or changes cover, you have a legal duty to take reasonable care not to give a wrong answer (legislation.gov.uk: Consumer Insurance (Disclosure and Representations) Act 2012, section 2). If something goes wrong with a claim or a renewal, you complain to the insurer first and can then take the complaint to the Financial Ombudsman Service.

Talk to Mortgage Lane about buildings and contents insurance when you are buying, moving or remortgaging, including the buildings cover your lender will require and cover for flood-risk, listed, thatched, timber-framed and non-standard homes, homes with past subsidence, high-value homes and contents, and homes left unoccupied. Landlords need landlord insurance, which is a different policy; for the lending side, see our page on buy to let mortgages. Protection insurance for the mortgage payments themselves is a separate subject, and our insurance pages cover life insurance when declined, income protection and family income benefit. Our page on residential mortgages covers the loan itself.

Buildings and contents insurance premiums

Buildings and contents insurance premiums are set by each insurer from the risk it takes on, and this page quotes none. Insurers price on the rebuild sum insured, the location's flood, subsidence and crime risk, the construction of the home, your claims history, the security fitted, the contents sum insured and the excess you choose. The excess is the part of each claim you pay yourself, so the level you choose changes the price. Optional covers such as accidental damage add to it. A policy whose buildings sum insured is below the true rebuild cost pays less on a claim, as the arithmetic further down this page shows.

Insurance Premium Tax is added to the premium, and home insurance is taxed at the standard rate of 12%, which has applied since 1 June 2017 (GOV.UK: Insurance Premium Tax rates). The higher rate of 20% applies to travel insurance and to some insurance sold with mechanical or electrical appliances or with vehicles, so cover for an appliance bought from a retailer can be taxed differently from the home policy (GOV.UK: Insurance Premium Tax). HMRC publishes the rates.

Two other rules affect what you pay. Since 1 January 2022 a home insurer cannot charge a renewing customer more than it would charge an equivalent new customer, as the renewal pricing section below explains. For older homes at high flood risk, Flood Re lets an insurer pass the flood part of a policy to a reinsurance scheme for a fixed price based on the home's council tax band. The scheme is funded by an annual levy on every insurer offering home insurance in the UK (Flood Re: how Flood Re works).

Buying, moving or renewing? Get in touch with the property's address, construction and rebuild cost before exchange of contracts, or before the date your lender and solicitor set.

Buildings and contents insurance checklist

Every buildings and contents policy can be checked against the same list, and each insurer sets its own terms for each item. The table lists what to compare before you buy or renew, as at October 2026. The buildings sum insured matters most, because it decides what any buildings claim can pay, and whether the policy has an average clause decides how a shortfall in it is treated. The insured events and the excesses set which losses are covered and how much of each you pay yourself. Cover while the home is empty and the limit for alternative accommodation apply when the home cannot be lived in. Unoccupancy limits, excesses and single-item limits vary by insurer, and the policy wording sets the terms that apply.

Types of home and cover, and how each is insured

The kind of home decides how many insurers will cover it, and on what terms.

Standard homes

A house or flat built of brick or stone with a tiled or slate roof is standard construction, the kind of home a standard combined policy is written for. The insurer still prices it on the rebuild cost, the location and your claims history, so the main task is setting the sum insured correctly. Our first-time buyer mortgage guide covers the rest of a first purchase.

Get in touch with your rebuild cost.

Leasehold flats

The freeholder or management company usually insures the building and recovers the premium through the service charge, so the leaseholder needs contents cover rather than a buildings policy. Check the block policy covers your flat's fixtures, such as the fitted kitchen and bathroom. In England and Wales a leaseholder whose service charge includes insurance can ask the landlord in writing for a summary of the cover, and the landlord must supply it within 21 days (legislation.gov.uk: Landlord and Tenant Act 1985, Schedule). The Leasehold and Freehold Reform Act 2024 contains provisions, not in force as at October 2026, that would stop a landlord recovering through the service charge the cost of payments made to arrange or manage the insurance, such as commission, other than payments that regulations permit, and would replace that right with a duty to give leaseholders insurance information (legislation.gov.uk: Leasehold and Freehold Reform Act 2024, section 59).

In Scotland the rule for flats is set by statute: each owner in a tenement must insure their own flat, and the part of the building that goes with it, for its reinstatement value, either alone or through a common policy for the whole building (legislation.gov.uk: Tenements (Scotland) Act 2004, section 18). Our page on a mortgage for a leasehold flat covers the lease checks a lender makes.

Get in touch with your lease's insurance clause.

Flood-risk homes and Flood Re

Homes built before 1 January 2009 can benefit from Flood Re, the scheme that helps insurers offer affordable flood cover to high-risk households. You do not apply to Flood Re: you buy home insurance in the normal way, and the insurer chooses whether to pass the flood risk to the scheme, paying valid flood claims first and being reimbursed later. To be eligible the home must have been built, and have had a domestic council tax band or the equivalent, before 2009; business premises are outside it, and the scheme covers homes in England, Wales, Scotland and Northern Ireland (Flood Re: eligibility). Homes built from 1 January 2009 are outside the scheme, so insurers price their flood cover on their own view of the risk. Flood Re is designed to run until 2039, when insurers are expected to offer policies based on the actual risk to each property (Flood Re: about us). A flood history or a high-risk postcode can also affect the mortgage; our guide to a mortgage refused due to flood risk covers this.

Get in touch with your postcode and flood history.

Listed, thatched and period homes

A listed home is normally rebuilt or repaired with matching materials and methods, which raises the rebuild cost. In England, works that would affect a listed building's character need listed building consent (legislation.gov.uk: Planning (Listed Buildings and Conservation Areas) Act 1990, section 7). Wales has its own regime under the Historic Environment (Wales) Act 2023 (legislation.gov.uk: Historic Environment (Wales) Act 2023, section 88), and Scotland and Northern Ireland have their own listed building rules. The RICS professional standard tells surveyors assessing reinstatement cost to allow for the extra cost of vernacular materials and traditional techniques on listed and specialist buildings. A thatched roof is assessed separately: insurers look at the condition of the thatch, how it is maintained and the fire safety measures in place, because these affect the fire risk. Specialist insurers cover both. Our pages on mortgages for listed buildings and listed buildings with thatched roofs cover the lending side.

Get in touch with the listing grade and construction.

Non-standard construction

Some standard insurers decline timber-framed, steel-framed, concrete and other non-standard homes, or ask for more detail before they quote, so the choice of insurer can be narrower. Describe the construction accurately when you apply, because it is one of the facts the insurer prices on. Homes built with systems such as precast reinforced concrete or with modern methods of construction can also narrow the choice of mortgage lender (our page on non-standard construction mortgages covers this), so check that buildings cover is available before you apply for the mortgage.

Get in touch with the construction details.

Homes with past subsidence

A history of subsidence, even one that has been repaired, can narrow the choice of insurer. Insurers that accept it may ask for repair certificates or monitoring evidence and may set a higher subsidence excess, and in some cases the existing insurer may continue cover after a purchase. Answer every question about subsidence accurately, because insurers take it into account in the price. Subsidence also matters to the mortgage lender, so check the insurance and the lending together.

Get in touch with the subsidence history and repair certificates.

Buildings insurance and your mortgage

Buildings insurance is normally a condition of a mortgage, and in England and Wales it usually needs to be in place from exchange of contracts, when the buyer becomes responsible for the property. The government's guide to buying a home in England and Wales says that you need to organise buildings insurance in order to exchange, because once you sign the contract you are legally responsible for the property, and that buildings insurance is normally a requirement of having a mortgage (GOV.UK: how to buy a home). At exchange of contracts the purchase becomes binding, so damage to the home between exchange and completion can fall on you as the buyer before you have moved in. The contract decides exactly when the risk passes, and your conveyancer and your lender's mortgage offer confirm the date your cover must start.

Lenders expect the policy to cover at least the rebuild cost, because the property is their security, and some lenders ask to be noted on the policy. Contents insurance is not a lender requirement, but it protects your belongings, and the government's guide suggests considering it before you move. An insurance condition that has not been met is one of the reasons a lender can decline to complete, as our guide to a mortgage declined before completion explains. If the lending fails once you are bound to buy, our page on a mortgage declined after exchange sets out where you stand.

On a remortgage the existing policy continues, because the home is already insured, and the new lender may ask for confirmation of the cover. A remortgage is still a sensible point to check the sum insured, since rebuild costs change and a figure set years ago may now be too low.

Scotland and Northern Ireland

In Scotland the purchase becomes binding when missives are concluded, and the date of entry, when the price is paid and you get the keys, follows later. When to insure depends on what the missives say: government guidance on mygov.scot advises buyers to insure the home from conclusion of missives unless the missives say something different (mygov.scot: making an offer). Where the offer uses the Scottish Standard Clauses (Edition 6), the risk of damage to or destruction of the property stays with the seller until settlement, and either side can rescind without penalty if the property is destroyed or materially damaged before then. The seller also warrants that the current buildings insurance was obtained on normal reasonable terms, and gives details of any factoring and block insurance arrangements for a flat (Law Society of Scotland: Scottish Standard Clauses, Edition 6). Your solicitor checks the missives and confirms the date your buildings cover must start, and your lender confirms what it requires. Our page on mortgages in Scotland covers the rest of the process there.

In Northern Ireland the purchase contract and its conditions decide when the property passes to your risk, and your solicitor confirms the date your buildings insurance must start. Our page on mortgages in Northern Ireland covers the lending. Insurance Premium Tax, Flood Re and the FCA's renewal pricing rules apply in all four nations.

Rebuild cost and market value: how much buildings insurance you need

The buildings sum insured is the cost of rebuilding the home from scratch, including demolition, site clearance, materials, labour, professional fees and compliance with current building regulations, not what the home would sell for. The professional standard that surveyors follow builds the figure from a net rebuilding cost, with allowances for debris removal and demolition, for professional fees, and for the changes needed to meet current Building Regulations and other statutory requirements. It says the figure for insurance purposes has no direct relationship to the market value of the property (RICS: reinstatement cost assessment of buildings). The land is left out, because a rebuild takes place on the same site.

Rebuild cost can be higher or lower than market value. A period home in an area where prices are low may cost more to rebuild than it would sell for, and a flat in an expensive city may cost far less to rebuild than its price, because much of that price is the location. Insuring for the purchase price can therefore leave one home underinsured and another insured for more than its rebuild cost.

The figure usually comes from one of three sources. A mortgage valuation report may state a reinstatement figure for insurance, and rebuild cost calculators give an estimate for a standard home. A chartered surveyor, a member of the Royal Institution of Chartered Surveyors, can carry out a full reinstatement cost assessment, which is the sounder route for a listed, older or unusual home. BCIS, which publishes a rebuild calculator, says that calculator is not appropriate for most older (pre-1800), complex or listed buildings, and that historic and listed buildings also have to be replaced like for like (BCIS: residential, what are the risks of underinsurance?). Building costs change, so check the figure at each renewal.

Home insurance renewal pricing

Since 1 January 2022, FCA rules have prevented home insurers from charging a renewing customer more than they would charge an equivalent new customer through the same channel. The rule is ICOBS 6B.2.1R: a firm must not set a renewal price higher than the equivalent new business price, judged at the point the renewal notice is prepared, and the firm must assume you came to it through the same channel you used when you first bought the policy (FCA Handbook: ICOBS 6B.2). The rules apply to home and motor insurance sold to consumers, and to related additional products (FCA Handbook: ICOBS 6B.1). The same package of FCA measures made it easier for most customers to cancel the automatic renewal of a policy (FCA: measures to protect customers from the loyalty penalty).

The rule caps the renewal price at the new business price, and premiums can still rise at renewal because of claims, inflation in rebuild costs or changes in risk. The price for a new customer can rise too. It is still worth comparing cover as well as price, because two policies at the same price can have different sums insured, excesses, average clauses and optional covers. Raising the sum insured when the rebuild cost has gone up adds to the premium, and the calculator on this page shows what an outdated figure can cost on a claim.

How buildings and contents insurance is arranged

1. Property details. The address, construction, year built, rebuild cost and security, with any listing, flood history or subsidence history.
2. Cover choices. The buildings and contents sums insured, the excesses and the optional covers, such as accidental damage and personal possessions away from home.
3. Disclosure. Accurate answers to the insurer's questions on claims history, subsidence, flooding, unoccupancy and business use.
4. Policy in force. Cover starting at exchange of contracts, or on the date the lender requires, with the lender noted on the policy where it asks.
5. Annual review. The sums insured and the cover reviewed at each renewal, starting with the rebuild cost.

What you must tell the insurer

The consumer's duty under the Consumer Insurance (Disclosure and Representations) Act 2012 is to take reasonable care not to make a misrepresentation when the insurer asks questions before cover starts or changes. That duty replaced the older duty of disclosure. Answer each question fully and accurately, including on past claims, subsidence, flooding, the construction and any business use, and check the policy for changes you must report during the year, such as the home being left empty. If a wrong answer was careless, the remedy depends on what the insurer would have done: where it would have charged a higher premium it can reduce a claim in proportion, where it would have set different terms it can treat the policy as issued on those terms, and where it would not have offered cover at all it can refuse the claim but must return the premiums. If the wrong answer was deliberate or reckless, it can cancel the policy, refuse all claims and keep the premiums (legislation.gov.uk: Consumer Insurance (Disclosure and Representations) Act 2012, Schedule 1).

If a claim or a renewal goes wrong

Complain to the insurer, or to the firm that sold the policy, first. For most complaints the business has up to eight weeks to consider it, and if you are unhappy with its final response you can take the complaint to the Financial Ombudsman Service within six months of that response, free of charge (Financial Ombudsman Service: how to complain). The arithmetic below sets out the ombudsman's approach to a claim reduced for underinsurance.

The cost of underinsurance: the arithmetic

Underinsuring a home's rebuild cost can reduce every claim proportionally, not only a total loss. Many policies include an average clause: if the sum insured is less than the true rebuild cost, the insurer pays only the same proportion of any claim. The Financial Ombudsman Service describes average in the same way. In its own example a home insured for £300,000 should have been insured for £500,000, so the insurer pays 60% of the claim. The ombudsman notes that average clauses are common in home insurance policies but that not all policies have them (Financial Ombudsman Service: underinsurance in home insurance complaints). The steps below follow one illustrative homeowner.

Step 1. The average clause on a £40,000 claim

The home costs £300,000 to rebuild, but the buildings sum insured is £225,000, 75% of that figure. A storm damages the roof, water comes in, and the claim is £40,000. Under average the insurer pays 75% of the claim, £30,000, and the homeowner is left with £10,000 to find before any excess. The claim is well within the £225,000 sum insured, so the whole shortfall comes from the proportion.

Step 2. The same claim at four sums insured

The shortfall grows with the gap. Insured for the full £300,000, the homeowner is paid the whole £40,000. At £270,000, 90% of the rebuild cost, average pays £36,000 and leaves £4,000. At £225,000 it leaves £10,000, and at £180,000, 60% of the rebuild cost, it pays £24,000 and leaves £16,000. Some policies apply average only when the underinsurance is larger than a margin the policy sets. With an illustrative margin of 10%, the £270,000 case would be paid in full, because the sum insured is within 10% of the rebuild cost, while the £225,000 case would still be paid at 75%.

Step 3. A total loss

If a fire destroyed the home and the claim was the full £300,000 rebuild cost, the policy could pay no more than its £225,000 sum insured, with or without an average clause, and the homeowner would be £75,000 short of the cost of rebuilding. That £75,000 is also the extra sum insured that would have closed the gap. Steps 1 and 2 show that, under average, underinsurance reduces partial claims as well.

Step 4. When average is applied fairly

The Financial Ombudsman Service is unlikely to find it fair for an insurer to reduce a claim by applying average unless the policy has a clearly worded term. Where the sum insured came from a reasonable answer to the insurer's question, the ombudsman will usually ask for the claim to be paid in full. Where the insurer would still have offered cover, but for a higher premium, the ombudsman is likely to accept a reduction in line with the share of the premium paid. In its example, a customer who paid £400 instead of £500 paid 80% of the premium and receives 80% of the claim. Where the insurer would not have offered cover at all, reducing or declining the claim is likely to be fair. That premium-based approach can give a different answer from the policy's average clause, so a reduction that looks wrong is worth a complaint.

What decides the case

Set the buildings sum insured on a current rebuild cost, from a surveyor or a rebuild calculator rather than the price you paid, update it at renewal for building cost inflation, and check whether the policy applies average and on what terms. On these figures, the £75,000 between a £225,000 and a £300,000 sum insured decides whether a £40,000 claim pays £30,000 or £40,000.