Whether you’re a property manager, commercial landlord, or business owner, understanding your building insurance is non-negotiable.

Yet many only realise their policy is inadequate after disaster strikes, when it’s far too late.

This article explains the different factors to consider when comparing building insurance policies effectively, how to avoid common mistakes and ensure you’re protected against the unexpected.

Why building insurance comparison matters

Building insurance protects your property from events like fire, flood, subsidence, and storm damage — but not all policies are created equal.

Failing to compare your options properly can result in:

• Underinsurance: Claims may be reduced or denied if your sum insured is too low.
• Overinsurance: Wasting money on unnecessary excess cover.
• Inappropriate cover: Leaving gaps you didn’t anticipate.

Without knowing your property’s actual reinstatement cost, you’re guessing — and that’s not a risk worth taking.

Types of buildings insurance cover (and how they differ)

Understanding what type of cover you’re comparing is essential to making an informed decision. Here are the main categories:

1. Reinstatement Cover

The most common type, covering the full cost of rebuilding your property from the ground up, including materials, labour, and professional fees.

The sum insured should reflect the current reinstatement cost — not market value — which can change significantly over time.

Why it matters: Underestimating reinstatement cost may trigger the “average clause,” reducing your payout proportionally. Learn more in our guide: Don’t get caught out by the ‘average clause’ in insurance.

2. Day One Reinstatement Cover

Allows you to declare the reinstatement cost as it is today, with an automatic buffer (typically 15–50%) to account for inflation and cost increases during the policy period. This means you don’t need constant reassessment.

Tip: Make sure the buffer covers inflation in high-demand areas.

3. Indemnity Cover

A budget-friendly option that accounts for wear and tear — you receive the current value of your building after depreciation, not the cost to rebuild as new.

Risk: This may leave you underinsured after major damage.

4. Buildings Sum Insured vs. Blanket Cover

Some policies use a blanket sum insured (e.g., £1 million) rather than a precise valuation. This may be insufficient for large or unique properties.

Step-by-step: How to compare building insurance policies

Step 1: Gather your key property and past coverage details

Prepare essential property information, including:

• Age
• Size
• Roof type
• Status (listed?)
• Security features
• Utilities
• External features
• Construction materials
• Last known market value

Also, have details of any previous insurance claims handy.

Step 2: Get a Reinstatement Cost Assessment

Obtain a professional assessment to determine the true rebuild cost of your property. This ensures your sum insured is accurate, helping avoid underinsurance and claim shortfalls.

Book your Reinstatement Cost Assessment with Cardinus.

Step 3: Understand your risk factors

Assess the specific risks your property faces:

• Flood risk: Check government or third-party flood maps.
• Subsidence risk: Review local geology and past claims.
• Crime rates: Examine local crime stats and consider security measures.
• Fire and other hazards: Note proximity to fire stations or industrial sites.
• Property usage & occupancy: Owner-occupied, rented, mixed-use, or vacant periods.
• Previous claims: Understand history to anticipate insurer responses.
• Environmental changes: Be aware of new developments affecting risk.

Step 4: Understand legal and mortgage requirements

Some mortgage lenders or local regulations mandate minimum levels or specific types of insurance coverage.

Also consider liability coverage if your property hosts visitors or employees. Confirm these requirements before comparing policies.

Step 5: Obtain quotes

Gather quotes from multiple sources:

• Use reliable comparison websites for convenience and variety.
• Contact insurers directly for exclusive or tailored deals.

Step 6: Check and compare coverage details

Evaluate more than just price. Consider:

• Cover limits: For buildings, outbuildings, fixtures/fittings, loss of rent/business interruption — ensure alignment with your reinstatement cost assessment.
• Coverage inclusions and exclusions: Standard perils vs. optional extras like accidental damage, storm, subsidence, escape of water, terrorism.
• Policy excesses: Know your out-of-pocket costs per claim and if they’re affordable.
• Terms and conditions: Check security or maintenance requirements and how unoccupancy affects coverage.

Step 7: Check the insurer’s track record

Research the insurer’s:

• Financial stability ratings
• Claims handling reputation
• Experience in your sector (e.g., commercial, mixed-use buildings)

Step 8: Evaluate auto-renewal options

Automatic renewal keeps coverage continuous but may prevent you from finding better deals or updated coverage. Set reminders to review policies annually before renewal.

Step 9: Negotiate your policy

Use competing quotes to negotiate better terms:

• Ask for discounts if you have no recent claims or improved security.
• Request tailored coverage or improved terms based on your property’s specific risks.
• Inquire about multi-policy discounts or loyalty rewards.

Step 10: Review your policy annually

Insurance needs evolve over time:

• Review your policy yearly before renewal.
• Update your reinstatement cost assessment after property improvements.
• Reassess risk factors such as flooding or crime trends.

Building insurance comparison checklist

Before committing, ensure you’ve covered:

• Rebuild cost accuracy: Verified by a recent reinstatement cost assessment.
• Type of cover: Reinstatement, day-one, or indemnity — does it suit your property and risk appetite?
• Policy excess: Amount you pay before insurer contribution.
• Exclusions and limitations: What’s not covered (especially for older buildings, flat roofs, or listed properties).
• Alternative accommodation cover: Temporary housing costs if property is uninhabitable.
• Inflation protection: Does the policy adjust sums insured for inflation?
• Trace and access: Covers locating and accessing hidden issues like leaks.
• Listed buildings or non-standard construction: Special clauses or rebuild methods.
• Insurer ratings & claims reputation: Their history of paying out fairly and quickly.
• Underinsurance clauses: Penalties and how the average clause might apply.

Common comparison mistakes to avoid

1. Basing sums insured on market value — It is often better to insure based on reinstatement value.
2. Ignoring policy exclusions — Lower premiums may exclude critical perils.
3. Not updating cover annually — Inflation, renovations, or regulation changes impact rebuild value.
4. Relying solely on online price comparison tools — They rarely account for your specific risks or property type.

Buildings insurance jargon buster

The insurance sector is renowned for its opaque terminology, yet it’s essential that you understand the specifics of any policy you’re considering.

In light of this, we’ve compiled the following glossary of common confusing jargon you’re likely to encounter during the comparison process.

• Sum insured: The maximum payout your insurer will pay in a claim.
• Premium: The monthly or annual sum paid to keep your policy active.
• Average clause: Proportionally reduces payouts if underinsured.
• Index-linking: Automatic inflation adjustment to sums insured.
• Trace and access: Covers costs to find and fix hidden issues.
• Excess: Your out-of-pocket cost per claim.
• Alternative accommodation cover: Pays for temporary housing if needed.
• Non-standard construction: Buildings with timber frames, flat roofs, etc., needing specialist cover.
• Listed building: Protected properties requiring specialist rebuild methods.
• Heave, subsidence, and landslip: Types of ground movement affecting buildings.
• Endorsements: Custom conditions modifying your policy.
• Underinsurance: Insuring for less than true rebuild cost.
• No claims discount: Lowered premiums for not having claimed of a set period. Sometimes referred ‘claims discount’.
• Liability coverage: Covers injuries and damage to other people or their property that occur on your property.
• Policy exclusions: Parameters not protected by a policy.
• Adjuster: An expert that investigates insurance claims to determine whether an insurer should pay out.

Why Reinstatement Cost Assessments matter

Insurance risk is higher than ever, with as many as 80% of commercial properties across the UK potentially underinsured, risking significant uncovered costs after major losses. The solution? A professional building insurance valuation for accurate, up-to-date rebuild costs.

At Cardinus, our expert reinstatement cost assessments help you insure your property at its true rebuild value, considering:

• Accurate RICS-accredited professional costings
• Demolition, site clearance, fees, and compliance
• Current market rates and regulations

Book a Reinstatement Cost Assessment with Cardinus today and protect your investment with confidence. Find out more.