Buildings and Contents Insurance can be bought either together to incorporate insurance for both aspects named in the title, or in part, to provide cover for just a building or just the contents of a building.
This type of policy is designed to provide benefits as and when claims are made against the loss of or damage to a building or the contents therein. Claims must be sufficiently sizeable to warrant a pay-out and will be judged by an assessor from the insurer, to check its validity.
If purchasing buildings and contents insurance (as opposed to just one or the other) you will have one premium but two sum assured amounts; one for the building and one for contents. This is the maximum the insurer will pay out in any one claim. Therefore, the sum assured for the building will be considerably higher than that for the contents.
B&C insurance can sometimes be compulsory if putting a mortgage on a property and the lender requests it be in place as a condition of the loan. Otherwise, like any insurance, you have to make a considered judgement about whether you think it is likely you will have to claim during the life of your loan. If the worst happens and you have to call on your insurance, then it can be money well spent.
The policies have a fixed term of twelve months, and are reviewed annually by the insurer. At this point, it is normal for renewal terms to be issued and the insurer will write to the policyholder directly in this regard on each anniversary of the policy, offering the opportunity to alter the terms of the contract to suit their requirements.
The premiums can be reduced by not having any claims for a prolonged period and increasing your excess (what you pay before the insurer does). Alternatively, premiums can be increased based on the amount being insured – larger properties and individual items of high value will almost certainly increase the premiums – or if claims are made regularly.
Premiums can be paid either upfront for the year ahead or monthly.