Home Insurance

Summary: Advice for the home owner regarding house insurance including buildings and contents insurance to ensure you are fully protected. Includes information on insurance policies with cover against theft, fire or flooding and also guidance on accidental damage and cover for garden equipment etc.

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There are two main types of insurance which protect your home and possessions. They are often combined and insurance providers often offer discounts if you take the two policies at the same time. Don’t assume all policies are the same. You need to assess your circumstances and decide which policies best suit you. It is also worth remembering to review your policies every 2 or 3 years so that you are sure that your cover is still relevant for your needs.

Accidental damage is often an optional extra, but as this can be covered by Buildings Insurance and Contents Insurance, make sure you aren’t covering the same things twice!

House of money

Houses can be expensive things!

Buildings Insurance

This is cover for the actual building and is for loss or damage to the structure of your home. This will need to be in place as soon as you are responsible for a property, so generally from the moment you exchange contracts if you are buying the property. You will find that most mortgage lenders will require you to have buildings insurance up to at least the value of your mortgage. When you purchase a house and have a survey done, this includes the re-build value that you should be insuring it for. Buildings insurance does not cover the market value of the property. Your insurance is usually index-linked so the amount of cover offered keeps up with inflation.

Typically, Buildings Insurance covers damage caused by:

  • Fire
  • Flood (including burst pipes etc)
  • Storms
  • Lightning
  • Earthquake
  • Subsidence
  • Falling trees/branches
  • Vehicle impact
  • Vandalism

However some of these may be exempt or cost more, such as subsidence or if you live in an area with a high risk of flooding, but if you fail to declare this your policy can become void, so don’t try!

Buildings insurance will also cover fixed fittings such as sinks, baths, toilets and fitted kitchens as well as your interior decoration. Many policies will also include outside buildings such as garages, sheds and greenhouses as standard, but it is worth checking if fences and other boundary features are covered. Also check if legal costs are covered in the event of loss or damage.

You can set the excess you will have to contribute in the event of a claim, so be realistic in what you would be prepared to pay for each claim.

Contents Insurance

This is an optional insurance but is very much recommended. This is cover for your possessions whether they are at home or in transit, and basic policies cover you for their total loss or damage from theft, fire, or flooding in your home. Other risks to consider are subsidence and falling trees etc.

It does not necessarily cover you for damage caused by DIY, willful damage of a property or loss of possessions outside a particular distance from the property.

Different policies will also offer extra cover for items such as garden equipment or possessions kept in garden sheds, bicycles, freezer contents, sports equipment, boats and caravans.

Accidental damage is usually a separate option.

A general policy will usually cover all your possessions as a whole, but particularly expensive items should either be insured separately. It may be better to have them named separately on the policy.

Types of Contents Insurance Policy

There are two main types of policy. Most insurers offer "new for old" cover which means it covers the replacement of an item that is lost or damaged with a new one. This type of policy usually costs slightly more than the alternative, but is usually worth paying the extra. But do check for exceptions to the policy which may include items of clothing, which are seen to have a life span of a few years before they are deemed unusable.

The main alternative sort of contents insurance is an "indemnity policy". This takes into consideration the wear and tear to an item. Therefore when you make a claim, a deduction for normal wear and tear of the item will have been included as well as any depreciation of value. Premiums for this type of policy are typically lower than ‘new for old’ policies but can be less practical in reality.

Your policy can be worked out in two ways. You can calculate the replacement value of everything in the property and use that total, or you can buy a ‘bedroom rated’ policy when the total is based on the number of bedrooms you have.

When looking at Contents Insurance, things that may be taken into consideration include certain types of burglar alarms and whether there is someone at the premises most of the time. These sorts of things may entitle you to a discount.

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