Standard and non-standard construction in insurance

Understanding property classification in building insurance

Upon a request to provide insurance for a building, the insurer will require sufficient data on the nature of the structures to determine the classification of the property to be insured. In insuring buildings, the insurer will classify the structure as either standard or non-standard construction or a combination of both. Policy terms and conditions and premium rates will be determined in accordance with this classification of property type.

What is considered standard construction?

A building insurance policy typically defines the term “buildings,” specifying the types of construction and materials covered. A property of standard construction, commonly called “brick and tile”, generally includes structures built using conventional methods and materials such as brick, stone, cement, metal, glass, ceramics, and treated timber.

Non-standard construction explained

Non-standard construction tends to be a little less definitive in its description, but would generally be any structure erected incorporating construction or materials not included in the insurer’s definition of buildings or standard construction. While all building insurers do define the term ‘Buildings’ in their policy wordings, not all definitions are the same. Some insurers’ definitions may not include certain words and/or compose their definitions in a manner that may be interpreted differently. Generally, non-standard structures commonly include structures with a higher risk of loss or damage due to fire, such as wooden buildings and those with thatch roofing.

Additional considerations in building insurance

When assessing a structure and its insurance needs, insurers and property owners should also consider the types of materials used, the fixtures installed, and their quantities. While some insurers classify asbestos roofing as standard construction, many may refuse to insure properties with existing asbestos due to strict regulations, high costs, and the complexity of disposal in the event of a claim. Such risks are often considered undesirable.

The importance of accurate disclosure and modern construction methods

As construction methods and materials evolve, property owners need to understand that the way a property is built and the materials used directly affect the insurance risk it presents. Insurers, in turn, adjust their underwriting criteria to provide appropriate and sustainable coverage. Failing to fully disclose the nature of your property to the insurer can lead to coverage restrictions or even claim denials.