How to Buy Building Insurance

There are several different types of building insurance policies. If you're building your own home, builders insurance protects you from problems that occur during the build. If you live in the UK or another Commonwealth country, you might need buildings insurance for your home, which is separate from insurance that covers the contents of your home. Additionally, if you own commercial property, you are responsible for insuring the exterior building – even if your tenants have their own insurance to cover their personal property.

Method 1

Method 1 of 3:

Buying Home Construction and Builders Insurance

1
Identify the appropriate amount of coverage to limit your exposure. Builders insurance protects you from any losses you'll incur if something goes wrong during a construction project. This policy protects you against risk, regardless of whether you're building a new house from the ground up or renovating an existing structure.^{[1]XResearch source}
- For example, if a construction accident causes damage to the foundation of your building, builders insurance would protect you against that loss by covering the foundation materials and the cost of rebuilding the damaged foundation.
- Builders insurance is limited to the losses that you would incur, such as the loss of building materials or the cost of paying contractors and subcontractors. It would not cover any losses your contractors incurred.
- Some builders insurance policies will also cover losses incurred if the construction project is delayed. For example, if you are building a new store and have to open the store a month late due to construction delays, builders risk insurance might cover that loss.
2
Confirm what your general contractor's insurance covers. When you hire a contractor to build your house, ask them to see a copy of their insurance policy. Carefully review what aspects of the build are covered by the contractor's insurance.^{[2]XResearch source}
- Some general contractors may already carry builders insurance. However, if the general contractor is listed as the first insured, that means they can change or cancel the policy at any time, and the loss that the policy covers is their loss, not yours. This may not adequately cover your risk.
3
Make your general contractor responsible for builders risk insurance. If your general contractor's insurance doesn't adequately cover the risk inherent in building the house, you may be able to make builders risk insurance a condition of working on the project. If the contractor agrees, they would be responsible for purchasing builders risk insurance at the coverage levels you require.^{[3]XResearch source}
- While you can purchase builders risk insurance on your own, your general contractor may be able to get a better premium rate and better coverage terms than you could get on your own.
Tip: If your general contractor purchases the builders risk insurance, make sure you are listed as the first named insured on the policy, because you are the one who is at risk of loss if something happens during the build.
4
Cover the project with an existing building policy if you have one. If you're renovating an existing structure, or if you already have insurance on other buildings you own, you may be able to use that insurance to cover your new construction project. However, you'll typically have to increase the amount of your coverage and pay additional premiums.^{[4]XResearch source}
- If you want to use an existing insurance policy, contact your insurance agent and find out if your policy can be expanded to cover an upcoming construction project. Your agent will give you information on what the policy can cover and how to set it up, as well as how the change will impact your current premiums.
5
Purchase builders risk insurance yourself as a last resort. If your general contractor is not willing to purchase builders risk insurance and you don't have another policy that could cover the risk of the construction project, you may have to purchase coverage on your own. To ensure full coverage, have the policy put into effect as soon as possible. Generally, the policy must be purchased before the project is 30 percent complete.^{[5]XResearch source}
- Most commercial insurance companies offer home construction and builders insurance policies. It's a good idea to get quotes from several different companies so you can choose the best coverage terms and premium rate.
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Method 2

Method 2 of 3:

Getting Buildings Insurance in the UK

1
Review your mortgage contract for a buildings insurance clause. Buildings insurance covers the exterior of your home, as well as any permanent fixtures inside your home, such as bathrooms and kitchens. Most mortgage contracts require you to carry a minimum amount of buildings insurance on the property until the mortgage is paid off.^{[6]XResearch source}
- Your mortgage contract should have a clause listing buildings insurance as a condition of the mortgage. The clause typically includes information about the minimum amounts of coverage you need and the types of policies that fulfill the condition.
Tip: Your mortgage company may also have an insurance company they recommend. While you don't have to use this company, you may get a slightly better rate if you do.
2
Determine how much coverage you need. Generally, buildings insurance covers the amount it would cost you to rebuild your home if it was destroyed. This cost may be found by looking at a recent survey of your property.^{[7]XResearch source}
- This amount includes labor and professional fees. Depending on the size of your house and materials used in building it, the amount of coverage you need may be substantially more than the market value of your home.
3
Get bedroom-rated insurance if you value greater convenience. More than half of the active buildings insurance policies in the UK are bedroom-rated. This means the insurance company comes up with an estimate of how much coverage you need based on the number of bedrooms your home has. The primary benefit of bedroom-rated insurance is that you don't have to worry about getting your home surveyed before buying insurance.^{[8]XResearch source}
- Bedroom-rated insurance policies also have a very high sum insured, so you don't have to worry about being underinsured if you have to file a claim.
4
Choose a sum-insured policy if you only want to pay for the cover you need. With a sum-insured policy, you have your home surveyed to determine exactly how much it would cost to rebuild your home if it was destroyed. Your insurance policy covers this exact amount. With a sum-insured policy, you can be certain that you're not paying for more insurance than you need for your home.^{[9]XResearch source}
- If you decide on a sum-insured policy, make sure the policy is linked to an index that adjusts the sum insured to account for rising construction costs. You might also want to have a survey every 2 or 3 years to make adjustments for the changing costs of building materials.
5
Increase your home's security to decrease the potential cost of your policy. Have appropriate locks installed on all your windows and doors and install an alarm or security system. Provided these systems are approved by your insurance company, you may get a discount on your premiums.^{[10]XResearch source}
- You might also consider buying your buildings insurance and your contents insurance (which protects your personal property) from the same insurance company. Most companies offer a discount if you have more than one policy with them.
6
Compare policies from 2 or 3 different insurance companies. Different companies have various discounts and specials that can save you money. Comparing quotes from several companies can help you find the best rate. There are several websites available where you can enter your information once and get quotes from different companies to compare side-by-side.^{[11]XResearch source}
- You'll typically pay a lower premium if you have a higher deductible. However, that higher deductible might come back to hurt you if you end up having to file a claim and can't afford to pay the deductible. Usually, it's in your best interests to try to get the lowest deductible possible.
7
Pay your premiums as agreed. Once you've signed your policy documents, your buildings insurance will go into effect. As long as you make payments on time, your home will be covered without disruption. However, if you skip a payment, your insurance may be canceled and you may have a hard time getting a replacement policy.^{[12]XResearch source}
- If you've bought buildings insurance in conjunction with a new mortgage, your premiums may be included in your mortgage payments.
- You'll generally pay more if you pay monthly premiums rather than annual premiums. If you can fit an annual premium in your budget, it can be a good way to save money overall.
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Method 3

Method 3 of 3:

Insuring Commercial Property

1
Analyze the risks your property faces. Your commercial property insurance should cover all the risks your building is exposed to. These risks may vary depending on the location of your building, as well as the materials used in the construction of that building.^{[13]XResearch source}
- For example, if you own a commercial building in a coastal area, you want to make sure you have insurance that covers damage from hurricanes and floods. Flood insurance is typically a separate policy from other types of insurance.
- Also keep in mind that local law may require minimum amounts of commercial property insurance. Your local small business association can give you more information about insurance requirements that apply to your business.
2
Search for commercial property insurance agents near you. Many national insurance companies offer commercial property insurance. However, you might get better terms and lower premiums from a smaller local insurance company. Ask other business owners in your area if they have an insurance company they would recommend.^{[14]XResearch source}
- You can also get recommendations from your local Chamber of Commerce, or small business associations in your area.
Tip: Check licenses of any insurance companies or agents you work with. Make sure the license is active and in good standing before you purchase an insurance policy.
3
Compile information about your property for the insurance company. Before they can give you a quote, insurance companies need basic information about your property, including its size, location, the uses it's zoned for, and whether you are leasing any space in your building. The insurance companies also may want information about your business and how it's organized.^{[15]XResearch source}
- If you currently have a mortgage on your property, get information about the mortgage to provide to the insurance company. The insurance company will want to know how much the property is financed for, as well as how much the property is worth.
4
Compare policies from several different companies. Get at least 2 or 3 quotes so you can make sure that you're getting the best coverage at the lowest premium for your company. Look at the policies available at different deductible levels.^{[16]XResearch source}
- Keep in mind that if you file a claim against your policy, you (or your business) will be responsible for paying the deductible. While your premiums will typically be lower if you have a higher deductible, make sure your business will be able to handle the deductible if you end up in the position where you have to file a claim.
- Don't be afraid to negotiate for a better deal with insurance companies. You may be able to play competing companies off each other to get a better deal than you were originally offered.
Tip: Keep premium payments in mind. Some companies may offer you a lower rate if you pay a full year's worth of premiums all at once, rather than paying regular premiums every month.
5
Sign the agreement for the policy that best suits your needs. Once you've found the policy you want, you'll typically have to sign some policy agreements before your insurance takes effect. This may involve going to your agent's office in person, or you may be able to complete the paperwork online.^{[17]XResearch source}
- Make several copies of your insurance documents and keep them in different places so you'll always have them. If your policy information is available online, it's also a good idea to download an electronic copy.
6
Make your premium payments as agreed. For some commercial property insurance, you pay the entire annual premium up front before the policy takes effect. With other policies, you can set up an installment plan to pay premiums each month.^{[18]XResearch source}
- Keep in mind that if you pay in installments, you may end up paying slightly more for coverage than you would if you paid the entire annual premium up front. However, if your annual premium is several thousand dollars, your business may not have the budget to pay it in full.
- Save all of your receipts for your premium payments. You may be able to deduct the amounts you paid on your taxes as a business expense.
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