Home Insurance

People often use the terms ‘home insurance’ or ‘household insurance’ in a general way to refer to insurance that covers any aspect of their home and belongings. However, these policies are usually split into separate sections – ‘buildings’ and ‘contents’ – and not all policyholders will be covered under both sections. It is also possible to buy a ‘contents-only’ or a ‘buildings-only’ policy.

While many homeowners buy both types of cover, some have only one. There may be a very good reason for this. Typically, for example, people who live in blocks of flats will only need to buy a policy to cover their contents. This is because the landlord will be responsible for arranging buildings insurance to cover the entire block. And some policyholders obtain contents insurance from one insurer and buildings insurance from another, because this may work out cheaper than insuring both contents and buildings together.

Even if a policyholder has both contents and buildings insurance, the scope of cover may vary so that, for example, an accidental damage claim might succeed under one section but not under the other. It is confusion about the nature and scope of cover that leads to disputes. The onus is on firms to ensure that the cover they sell is suitable for the needs and resources of their policyholders and that the policyholders understand what they are buying.

buildings insurance covers the structure of the building, plus permanent ‘fixtures and fittings’ such as baths, fitted kitchens etc. The test is – can it reasonably be removed and taken to another home? If it can, then it is part of the ‘contents’ and it will not generally be covered by a buildings policy. Buildings policies usually include outbuildings – garages, garden sheds etc. contents insurance covers your possessions – your television set, furniture, clothes etc. In other words, just about everything you would take with you if you moved.

While it is generally easy to determine whether an item is part of the buildings or part of the contents, we see plenty of cases where this is not immediately apparent. The way in which a firm categorises certain items can sometimes appear to the policyholder to be illogical or, at worst, a cynical attempt to avoid paying legitimate claims.

For example, a television set is clearly part of the household contents and is covered under the contents policy – as is a portable aerial that sits on top of the set or close to it. But why should a television aerial that is fixed permanently to the roof of the house also be defined as part of the contents? Very few householders would ever think of climbing on to the roof and dismantling the aerial in order to take it with them when they move house. And claims for these aerials are most likely to be made when the roof has been damaged by an ‘external insured event’ (such as storm or lightning) that is covered by the buildings insurance.

Our general approach in the disputes that are referred to us is to regard those items that are fixed and have essentially become part of the fabric of the property as ‘buildings’, while the rest are ‘contents’. So, for example, we would normally consider fitted wardrobes, fitted kitchens and built-in appliances to be covered under a buildings policy, whereas the contents policy would cover items of furniture and appliances that are free-standing or (if screwed to a wall) easily removable.

We obviously have regard to the policy definitions and exclusions. However, where we consider that a firm’s policy definition of an item as ‘contents’ or ‘buildings’ was unreasonable, and has led to a perverse and unfair result, we may require the firm to pay the claim.

Like the courts, we follow the industry convention of treating carpets as ‘contents’, even though they are often fitted. Although most people would probably leave their fitted carpets behind when moving home, the fact remains that fitted carpets can be taken up relatively quickly and easily and re-laid to an acceptable standard. It is their transportable quality that properly makes them part of the contents.

But what about laminate wooden flooring? Its increasing popularity over the last couple of years has led to a number of disputes about whether it is covered by the buildings or the contents policy. In a typical case, the policyholder only has contents cover. When the flooring is accidentally damaged, the firm refuses to meet the claim, insisting that laminate flooring is part of the building.

We take the view that most laminate wooden flooring (where the individual planks are glued together and fixed under a skirting board or beading) is a ‘fixture and fitting’, not ‘contents’. Unlike a carpet, it is difficult to remove intact and has, essentially, become part of the building. However, in some instances we may regard re-useable click-together laminate wooden flooring as ‘contents’. This type of flooring is no more ‘fixed’ to a room than a fitted carpet is. Indeed we are aware that some of the more expensive products are specifically marketed as being ‘easily transportable’.

Disputes sometimes arise over items that would normally fall clearly into the category of ‘buildings’ rather than ‘contents’, but have been temporarily removed. If such items are then lost or damaged while they are being stored, can the policyholder make a claim under a contents policy – or are the items still only covered as ‘buildings’?

Similar disputes can arise where policyholders have bought items, such as flat-pack kitchen units or laminate flooring, which are then damaged or stolen before they have been fitted. Our approach will depend on the circumstances of each case. But in most instances we would consider that the buildings insurer should cover parts of the building that have been only temporarily removed. Whereas new items, which have not yet been fitted, should be treated as ‘contents’, on the basis that they are the policyholder’s personal possessions.

In our view, if a policyholder has both buildings and contents cover, and the item claimed for is not specifically excluded by one or other of the policies, then the insurers themselves ought normally to be able to settle any disputes about who should deal with the claim. It does nothing to promote the industry’s reputation if policyholders are forced to bring disputes to us simply to obtain payment for a legitimate claim. Where there is real ambiguity about which insurer is responsible for covering the item, then it would seem sensible for each of them to meet 50% of the customer’s loss.