Cover to keep you in the house to which you're accustomed

The fact that mortgage lenders can no longer force customers to buy the building insurance they offer has been good news for all borrowers. But it has been particularly good news for people who live in unusual or high-cost properties.

For owners of thatched cottages, listed buildings or other property built of non-standard materials, the mainstream policies offered by lenders are not only expensive but they can also offer inappropriate cover.

If you live in a thatched property, some companies - Direct Line, for example - won't insure you at all. Other general insurers, such as Norwich Union, will load the premium - sometimes quite substantially - because of the increased fire risk posed by thatched properties.

Dennis Ratcliffe, Chairman of Country Thatch Insurance Agency, thinks that standard insurers, because they lack expert knowledge, overestimate the risk and so load the premium unnecessarily. You are likely to get a much better deal by going to a specialist who understands the risks of living in a thatched property.

One of the reasons that specialists can keep the price down is that they are more likely to ask detailed questions about the state of the property. They will also insist on safety checks being carried out. 'Too many fires are caused by faulty electrics and when there is a fire it is almost invariably a total loss,' says Ratcliffe. Both Country Thatch and Holman Insurance Brokers, for example, insist that owners have their wiring, chimneys, fireplaces and other heating appliances checked.

You may also find that it is a condition of the insurance that you take certain fire-prevention measures such as having a fire extinguisher on every floor, not using naked flames in the roof space and not lighting fires within a certain distance of the property. These are all things that benefit the insurer (because they reduce the likelihood of a claim), but expert advice on anti-fire measures also benefits owners who are unlikely to want to see their homes rapidly go up in smoke.

As Maureen Galloway of Holman Insurance Brokers points out, such advice is particularly valuable for people new to living in thatched properties who may not be aware of the hazards involved.

Mainstream insurers may not agree, but people who live in listed buildings should be less worried about fire and more worried about the risk of being underinsured. 'Owners of listed buildings tend to be under-insured by as much as a third - sometimes more,' says Nicholas Tufton, an independent surveyor who specialises in valuing listed buildings and other period properties. 'The biggest mistake people make is insuring for the market value of the property rather than the cost of rebuilding it.'

The problem of under-insurance is particularly acute for owners of listed property for two main reasons. First, rebuilding costs tend to be higher because of the specialist materials and labour involved. Second, where owners of conventional properties have choices in rebuilding, owners of listed buildings do not. English Heritage has the legal right to insist that a property is restored to its former glory - which can include specifying the exact materials to be used for the restoration as well as the contractor who will carry out the work.

In the case of the owner of a burnt-down listed property in Sussex which cost £2 million to rebuild, the stringent requirements of English Heritage contributed to the additional £500,000 he had to find to make up for his under-insurance.

Andrew Jobson of brokers Jobson Needham believes that owners of listed buildings should consider a policy from a specialist insurer such as Chubb (which has no connection to the lock company) or Hiscox. These insurers are primarily targeting very affluent property owners who also have antiques, fine art collections and valuable jewellery to insure. But these policies can be equally suitable for people who own homes (whether listed or not) with a rebuilding cost in the region of £250,000 to £300,000 (and contents worth a minimum of £75,000).

But does specialist mean more expensive? Jobson says not, and points out that the cover is better. What is worth having is the guarantees they are prepared to offer. Provided you have a recent specialist valuation of the rebuilding cost of your property (Chubb has its own valuers to do this; Hiscox can point you in the direction of a suitable expert), they will agree not to cap the sum insured. This means that even if the cost of rebuilding your home turns out to be more than the figure you were insured for, the claim will be met in full. A similar guarantee is available with the Mansion Plan policy from James Hampden Insurance Brokers.

Contacts

• Country Thatch Insurance Agency: 0800 0562999

• Holman Insurance Brokers: 01268 730733

• Nicholas Tufton: 01763 848888; for other surveyors specialising in listed buildings, contact the Royal Institution of Chartered Surveyors on 020 7222 7000

• Needham Jobson: 020 8944 8870

• For brokers who sell Chubb policies, phone 0700 248 2207 or e-mail masterpiece-uk@chubb.com; for those who sell Hiscox policies phone 020 7448 6000

• James Hampden Insurance Brokers: 0800 028 3849