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Building Insurance vs.Home Insurance: Understanding the Differences

Posted on 07 Jan, 2025

When it comes to safeguarding your assets, having the right insurance in place is crucial. However, the terms building insurance and home insurance are often used interchangeably, which can add to the confusion. Although both offer homeowners financial protection, each covers different aspects of your home. This blog will delineate the difference and help you to choose the right policy that suits your needs

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What is Building Insurance?

Building insurance covers the building structure of your property, including the walls, roof, floors and permanently attached fixtures like built-in cupboards and kitchen cabinets. It covers the costs of repairs or rebuilding in case of natural disaster, fire, or vandalism.

Key Features of Building Insurance

  • a) Protects your property’s structure
  • b) Guards you against fire, floods, earthquakes, and storms.
  • c) Consists of permanent fixtures like bathrooms, kitchens, and fitted wardrobes.
  • d) Mortgage insurance (most commonly required by mortgage lenders if there is less than 20% equity in the home)

What is home Insurance?

Home insurance is an umbrella term covering two types of cover, known as building insurance and contents insurance. Building insurance is for the structure, contents insurance protects your personal things inside the property like furniture, electronics, and clothes.

Home Insurance Guide: All You Need to Know

  • a) Merges building insurance with contents covered in a single policy.
  • b) Protects personal property from the risk of theft, damage, or loss.
  • c) Optional add-ons may include accidental damage or high-value item extended coverage.

Building Insurance: Why is it Vital?

Picture a storm that damages your roof or an accidental fire that destroys the structure of your house. Without building insurance, being able to repair or rebuild can be financially crippling. Building cover means you’re not hit with the costs — and return to your home without the possibility of thousands of pounds worth of excess.

It also offers peace of mind to landlords and property owners who rent their spaces. Lenders ask for building insurance on mortgaged homes because the mortgage is basically an investment on their end.

Who Needs Building Insurance?

  • a) Homeowners: If you own a property, it is crucial to protect it with building insurance.
  • b) Owners of property: Provides insurance for rental buildings against unexpected loss.
  • c) Condo Owners: The homeowners’ association generally insures the building’s structure, although you need to ensure what is and isn’t covered.
  • Compliance: It is essential to maintain records and follow guidelines to streamline the claim process and prevent disagreements. This makes claim processing and settlements smoother.
  • d) Owners of Mortgaged Property: Mortgage providers require building insurance as a loan security feature;

What is not covered by building insurance?

Though building insurance provides considerable protection, there are things it does not cover:

  • a) Personal items inside the house.
  • b) Normal wear and tear or maintenance.
  • c) Damage resulting from negligence or intentional acts.
  • d) Jewelry or other high-value items, unless covered by specific add-ons.

For this, a combined home insurance policy with contents coverage is a wiser option.

Advantages of taking building insurance along with contents insurance

A combined home insurance policy is an all-encompassing choice. Not only does it cover the building, but it also protects you from losing your personal items to theft, damage, or even loss. Plus, since combined policies are often bundled into one package, they can offer substantial savings.

When selecting building insurance, consider the following factors

  • a) Restore value: Make sure the appropriate sum insured covers the total cost of rebuilding your property, not just the marketplace value.
  • b) Risk assessment: Consider risks that are unique to your area, such as flooding, earthquakes, or other natural disasters.
  • c) What’s covered and what’s not: Read the fine print for specifics as to what’s covered and what’s not.
  • d) Premium amount: Seek multiple quotes to find the deal.
  • e) Add-ons: Optional add-ons like coverage for accidental damage could help secure a more robust policy.

Insurance advice: How to maximise building insurance

  • 1) Review your policy annually: Make sure your policy is in line with the rebuilding costs.
  • 2) Affordable Insurance Policies: If you can, try to bundle your building insurance with your contents or your landlord's insurance.
  • 3) Seek out Specialist Insurers: If your property has anything special about it, seek out providers that address specialised properties
  • 4) Don’t Underinsure: The sum insured amount needs to cover you for the full cost of rebuilding your home or contents. Underinsurance can leave you out of pocket when you need it most.

Choosing the Right Policy

It would be wise to choose from building insurance contents insurance or combined home insurance depending on your requirements For property owners, start by insuring the building to protect its solid structure. Renters, however, may choose to purchase contents insurance to cover their belongings.

Conclusion: Insure Your House and Protect Your Home Right

What is the difference between building insurance and home insurance? Building insurance covers the actual building structure but home insurance covers for all including floatables. Consider your property needs, compare policies, and select the one that gives the most protection

Help us know you better!

This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Property Insurance, 1016 , IRDAN115RP0006V01202021)