Home insurance offers property owners and renters a vital financial safety net by covering damage, loss or theft involving a building’s structure and contents.
It provides the peace of mind that comes with knowing you’ll be able to afford any necessary repairs and replacements, as well as the cost of potentially having to live somewhere else if your home becomes uninhabitable.
Your home and possessions can take a lifetime to accumulate, and if you don’t insure them you could be one bit of bad luck away from financial ruin.
What types of Home Insurance are there?
The way to distinguish between the two is to imagine you’ve picked your home up and turned it upside down. Everything that falls out is the contents, such as sofas, white goods, electronic equipment and jewellery, and everything that stays fixed, such as the walls, roof, windows and doors, is the buildings element.
Buildings cover and contents cover can be taken out separately or together, but often it’s cheaper to opt for both in the same policy.
If you rent, you will almost certainly only need contents insurance as you don’t own the property itself and therefore have no need to insure it. Insuring the building is the responsibility of the landlord.
Buildings insurance – What does it cover?
Buildings insurance policies, as with other insurance policies, vary from provider to provider, but most cover your buildings main structure in the event of the following:
- Burst pipes
- Falling trees
- Lightning strikes
Main structure – The ‘main structure’ includes elements such as roofs, walls, windows and driveways, as well as permanent fixtures including bathroom suites and kitchen units.
Outbuildings – Depending on the policy, it may or may not cover outbuildings. If you own a property with structures that are detached from the main home, such as garages, barns, outdoor offices and swimming pools, and want these covered too, you need to check that your home cover includes them.
Wear and tear and maintenance – Be warned that ‘wear and tear’ (i.e. the general deterioration that property can suffer with age), and any damage that is deemed to have occurred due to poor maintenance, won’t be covered.
Contents insurances – What does it cover?
A home’s contents need insuring too, separate to the building itself. Contents insurance covers the items in your home against the same things as buildings insurance, but certain additional policy elements can be added to reflect the more movable nature of ‘contents’ (see further on in the guide).
Contents – ‘Contents’ refers to all your possessions, including jewellery, clothing, televisions, smartphones, bicycles, tablets, electronic items, antiques and musical instruments, as well as ‘fixtures and fittings’, such as curtains, carpets, sofas, cookers, fridges, freezers and other white goods.
New for old – Most policies cover the value of items lost, stolen or damaged (including ‘accidental damage’ if it’s included in the policy) on a new for old basis. However, some of the cheapest policies don’t, and only offer cover for items based on their value at the time of the claim (i.e. their second hand value) which could be considerably lower.
Why you need Home Insurance
If you’re wondering why you need Home insurance, ask yourself this question: If your property and possessions were destroyed in a fire or fierce storm, could you cope financially if you weren’t insured? For the vast majority of people the answer is no.
Whether you suffer because of theft, natural disasters such as flooding and hurricanes or even burst pipes, home insurance is there to help you cover the cost and get your life back on track.
From the building itself, including walls and roofs, to fixed elements such as bathroom suites and kitchen units and the contents you own inside it, having Home Insurance should mean you’ll be protected if the worst happens.
Cover for contents
- If all the items in your home were destroyed, perhaps in a fire or flood, or you came home one day to find your property had been stripped of its contents by burglars, replacing everything could cost a fortune.
- If were the victim of theft, and lost your jewellery, electronic gadgets or bicycles, contents cover means you can afford to replace the things you own by making an insurance claim.
- Be warned that not all policies cover what’s deemed to be ‘accidental damage’ as standard, like dropping something down the stairs, and this may have to be paid for as an ‘add on’. However, its addition shouldn’t increase premiums enormously.
Cover for buildings
- While buildings insurance isn’t compulsory, if you have a mortgage on your property may be.
- If your house were destroyed, and you didn’t have buildings insurance, you would still be liable for the outstanding debt on your mortgage, and expected to pay it off as if the house were still standing.
- Therefore lenders stipulate that buildings insurance is a legal requirement of having a mortgage and will ask you to either take it out through them, or find a provider yourself and give evidence of it.
- It’s nearly always cheaper to take out your buildings insurance through a provider other than your mortgage lender, so shop around. Brokers such as ourselves here at Policy Expert can help you find the deal that’s most suitable for your requirements.
- If you have items in your home which are particularly valuable, and likely to exceed the claim limits lenders stipulate in their home, you must tell your insurer about them.
- The insurer needs to know as it may increase your ‘risk’ profile, and in turn increase the premiums. You may also need to increase the claim limits and change the type of cover.
- If items you own are unusual, or particularly fragile, such as antique vases or fine glassware, you need to specify them to check the insurer will cover them in a policy. This is irrespective of whether you think they exceed the policy’s claim limits or not.
- If you don’t specify particularly valuable, unusual or delicate items, you may find you’re not covered for them at all in the event of making a claim.
Cover away from home
- Some policies include cover for your possessions when you’re away from home. So if, for example, you had an iPhone stolen while in a bar or other public place, you’d be covered.
How do you calculate how much cover you need?
Calculating how much cover you need is vital. Many people completely underestimate how much it would cost to re-build their home, or how much a home’s contents are worth, often by many thousands of pounds. They’re then hit hard if they make a claim.
- Estimating the re-build cost – Crucially, with the building insurance element of your home cover, the property isn’t insured based on its market value (i.e. how much you would get if you were to sell it), but how much it would cost to be re-built.
The market value could be £750,000, but re-building it might only cost £350,000. If you got it wrong and gave a figure of £750,000, the policy could cost considerably more. However, it’s always better to overestimate than underestimate as you don’t want to be left out of pocket if you needed to make a claim.
Unusual properties, such as converted barns, homes with thatched roofs or grade I or II listed properties, may cost more to re-build than most and you need to take this into account.
- Getting a quote – Ask local builders if you’re unsure how much it might cost to re-build your home. Or get in touch with the Royal Institute of Chartered Surveyors (RICS) who will put you in touch with a surveyor who can provide guidance. RICS also has a Building Cost Information Service (BCIS).
- Policy Expert’s insurance providers – At Policy Expert we thoroughly vet our insurers and only work with those that offer cover we think is sufficient in today’s market. However, you should still check that the buildings insurance cover you’re offered is right for your home.
Don’t underestimate the value of your possessions – Many people underestimate the value of their home’s contents by thousands of pounds. Usually it’s because they’ve forgotten that ‘contents’ doesn’t just include the things they carry around with them or wear, but also ‘fixtures and fittings’ such as carpets (often the most expensive items to replace), curtains, rugs and white goods such as fridges and freezers.
Go through room by room – Make a detailed list of absolutely everything in each room, including fixtures and fittings (as described above), such as carpets and light fittings.
Current value – The value of each item should be based on how much it would cost to buy that item new, not its second hand value. So even if your television is 10 years old, and not worth very much, a newer version might still cost hundreds of pounds.
Get valuations – If you’re uncertain of an items value, which may well be the case with jewellery, antiques, musical instruments, china and glassware, you should get it valued. Having proof will also help in the event of having to make a claim.
Claim limits and valuable items
- Claim limits – Home Insurance policies have maximum claim limits which are set for both individual items and total claims involving multiple items. These vary from policy to policy so you need to be careful that you check they meet your needs.
For single items with standard policies, claim limits are usually in the region of £1,000 to £2,000.
Total claim limits with standard policies vary anywhere between £30,000 and £50,000.
- Check and check again – It’s crucial to check that the claim limits on a policy match the value of your home’s contents and your requirements.
- Valuable items – For individual items that are particularly valuable, you need to tell the insurer about them and check that the single claim limits are enough so that they’re fully covered
Some insurers will include specified items for free, depending on how many you own and how much they exceed the single item claim limit by. Additionally, some providers will cover highly valuable items when they’re away from your home. This means engagement rings, necklaces, watches, expensive gadgets and other items you might take with you will be covered.
How is your premium calculated?
Your home insurance premiums are based on many factors, including factors like the crime rate where you live, whether your home is in an area prone to flooding, if you have children, the quality of your home security (e.g. if you have a house alarm or very good locks), your job and type of property you own (e.g. new build, flat, detached, terraced).
At Policy Expert we can arrange for cover to be tailored to your particular circumstances and find you the best provider, at the best price, for your Home Insurance needs.
How to get cheaper Home Insurance?
As with most things in life, it’s often the case that the more you pay the higher the quality of Home Insurance you get. Cheaper Insurance can often mean a higher excess, lower claim limits and more exclusions.
However, that doesn’t mean that you shouldn’t hunt out the cheapest policy that matches your needs.
Whether you have a budget of £30 a month, or £300, at Policy Expert we’ll help you get the best home cover deal that matches your individual requirements.
We get you quotes from providers we believe offer the best insurance policies at the best prices. We work closely with quality, handpicked insurers and can offer exclusive deals from providers that you won’t find elsewhere.
Here are a number of tips to ensure you get the most cost-effective home cover:
- Always shop around – Compare quotes from a number of providers, but make sure you compare like-with-like. Once you’ve decided on the cover levels and various inclusions you need, such as away-from-home protection or accidental damage, make sure each quote is based on the same requirements.
- Security is key – Good home security can help lower your premiums and save you potentially thousands of pounds in the long run. From having British Standard locks on doors and windows fitted, to using high quality monitored alarm systems, insurers will look more favourably on you as a ‘risk’, and should offer you better terms than those with poorer security.
- Review your security – Check annually that your home is as secure as possible. Locks can begin to wear out over time and may need replacing. Batteries can run out in burglar and smoke alarms, or the electrics can go wrong.
- Pay in a lump sum – Generally, you’ll pay less for your home insurance if pay up front, rather than monthly.
- No claims discount – If you’ve built up a number of years without making a claim, you can, and should expect to get, what’s called a ‘no claims discount’. Ask different providers what discount they’ll offer you.
- Don’t pay for cover you don’t need – Insurers may include ‘add-ons’ as standard which you don’t need when providing quotes. These can range from freezer contents insurance to outbuildings and boiler cover. Ask for those things that are surplus to your requirements to be removed and a new quote provided.
- Avoid paying for dual cover – Some insurers might include policy elements which you’re covered for in other ways. Certain types of bank accounts or credit cards provide holders with away from home cover for gadgets or legal insurance, for example.