Unlimited buildings insurance policies

The insurance market, specifically the UK home insurance market, has changed over the last few years and we’re now experiencing a hard market. A hard market is brought about by a reduction in insurers’ capacity and their appetite to write insurance. The reasons for which can be found in our article: The home insurance market.

A consequence of a hard market is that customers are not being offered a renewal and new clients aren’t being offered a quote. One particular home insurance policy which some insurers are no longer offering is Unlimited building insurance policies also know as “blanket cover” policies.

Here we looks at the cover these policies offer, why the cover isn’t all that it appears to be, and how a mid net worth policy may be an alternative policy for you.

Unlimited building insurance policies

The “unlimited” headline refers to the total buildings sum insured. As we’ll discover, that’s not necessarily the most important factor to consider when buying your home insurance.

• The unlimited buildings figure will only come into play if there’s a total or near total catastrophic loss. You’ve no number for which you’re indemnified, no starting point for negotiation. It may be harder to prove what your total loss is as you’re effectively starting from zero, rather than say, £500,000.
• But total losses are thankfully rare. So, for most claims, that “unlimited” figure is meaningless.
• Insurance policies have “inner limits.” Whilst your total rebuilding figure may have no maximum, these inner limits, written into the policy wording, will reduce the amount an insurer will pay out for the following:

• • Finding a leak. Sometimes called “trace and access,” this is the amount an insurer will pay out to find the source of a water leak in your home, or on your land. If in the home it needs to be enough to cover the cost of your flooring and perhaps kitchen or bathroom units too. This almost certainly won’t be unlimited on a policy like this, and the inner limit could be as low as £5,000. Escape of water and the resulting disruption can be avoided by having a water leak detector. 
  • Alternative accommodation: This is vital cover and provides you and your family with somewhere to live if your home is uninhabitable. Some “unlimited” policies provide only 12 months of cover, which may not be enough if your home is listed or non-standard. Remember that rebuild costs have increased and repairs may take longer due to the higher demand and lower supply caused by Covid-19 and Brexit.
  • Theft or attempted theft: If this inner limit is restricted, then you may not receive enough in the event of a claim to repair any damage a burglar has made to your home.
  • Outbuildings cover: Unlimited buildings cover may only apply to your main property and not to your outbuildings, which may be limited and sometimes as low as £25,000. Ask yourself, would that be enough?
  • Pairs and sets cover. Check if you have this cover for your building. Remember that a bathroom suite may be classed as a “set”. If your basin is damaged, will your insurer pay for a matching replacement set?
  • Architects and surveyors’ fees. Are these covered under the unlimited heading or is this cover restricted? Again, if your home is listed or non-standard, you may face a shortfall in the event of a claim.

Unlimited policies aren’t restricted to buildings – unlimited contents insurance policies are also available. Again, just because your contents are unlimited this doesn’t mean that you’re properly covered as there are all kinds of inner limits which will apply.

What is a mid net worth policy?

If you have an unlimited buildings insurance policy then you may be able to improve upon the level of cover you have by switching to a mid net worth policy. A mid net worth policy doesn’t always cost more than a standard policy. They are designed to protect higher value contents and will have higher single article limits and inner limits for things like alternative accommodation, finding a leak, art and jewellery. The policies are usually “All Risks” which means that there’s wider cover for more eventualities. They can also include cover outside your home for all of your contents, fine art and jewellery.

If you’re questioning the level of cover you have, or think that you may benefit from a mid net worth insurance policy, then contact us on 020 8256 4901 or email privateclients@howdeninsurance.co.uk