All you need to know about home insurance
After your loved ones, your home and everything in it are likely to be the most important items in your life. Protecting them is why home insurance is far more than just a necessary additional expense. The right policy goes a very long way to safeguarding some of the things you care about the most.
However, the wrong policy – or no policy at all – could be disastrous. Here are the answers to some questions you may have about home insurance.
Why do I need home insurance?
Few people could afford to replace their home and possessions if they were damaged or destroyed. Home insurance prevents you from suffering financially.
The right policy can bring you the comfort of knowing that if although being the victim of an event such as a fire, flood or theft is difficult, it won’t cause you permanent hardship. It’s the kind of knowledge that brings peace of mind in uncertain times.
What kind of insurance do I need?
There are two kinds of home insurance – buildings insurance and contents insurance.
Buildings insurance will pay out to repair or rebuild your home. It covers the fabric of the building rather than the things in it. It includes permanent fixtures such as kitchen units and bathroom suites. If you own your home, it’s essential you have buildings insurance – it will be a condition of your mortgage agreement (if you have one).
Imagine how much everything in your home would cost to replace if it was destroyed – this is what is covered by contents insurance. It includes clothes, furniture and electrical goods.
How much cover should I get?
Buildings insurance is based on the cost of rebuilding your home, not what its market price is. In many cases, this can be a much lower value as it does not include the price of the land. Overestimating this amount will push the cost of your policy up.
You can check your rebuilding costs by using this calculator: https://abi.bcis.co.uk/calculator/calculator.aspx
Contents insurance will allow you to replace the moveable objects in your home if they are lost or damaged. Here it’s crucial that your cover is high enough to reflect the value of your possessions. If your insurer believes there’s a shortfall in your cover it will affect what they will pay out. For example, if you only have cover for £30,000 of contents but the value is £40,000 you will have a 25% shortfall. If you need to make a claim for, say, £4000 of items damaged in a flood, your insurer may reduce the payout by 25% to £3000. The best way to make sure you’ve got it right is to go through your house room by room and calculate the value of your belongings.
Don’t forget to check that your policy gives new-for-old cover. This means that if your five-year-old TV is destroyed, your policy will provide a new TV rather than pay out the value of a five-year-old model.
What should I get insured?
The main things are, of course, your home and its contents. However, there are other items it’s worth considering including in your insurance.
Digital data and downloads can be worth a significant amount. Not all home insurance policies cover this as standard so it’s a good idea to check.
Carpets are not always covered which is why you should make sure they’re included. Spills and stains are all-too-common events.
Accidental damage cover can be added to your policy. This will increase the cost of premiums, but the peace of mind may be worth it.
Another option for many policies is to add personal possessions cover for items such as mobile phones, cameras and laptops outside the house. Once again, it costs a little extra.
What won’t be covered?
Not all policies are the same so it’s a good idea to read the small print to understand what is covered and – more importantly – what isn’t. Most policies will have a number of exclusions – things the insurer won’t pay out for.
These can include damage caused by DIY, ongoing pollution, times your home is empty for longer periods, flood damage in certain areas, sub-letting or running certain businesses from home. Even certain kinds of pets, such as Rottweilers or pit bulls, may be considered an extra risk. Equally, particularly valuable items, such as jewellery or works of art, may not be covered under a standard policy.
Some unusual property types won’t be covered under a standard home insurance policy. If you live in a listed building, a self-build home or any other specialist building type you may need specialist insurance.
How can I reduce the cost of my home insurance?
It’s important not to cut corners with the level of cover you need. However, buying home contents and buildings insurance from the same insurer can work out cheaper than buying from separate insurers.
Having the right kind of security systems and using them properly can reduce your premiums. Some policies offer discounts for locks, burglar alarms and other safety features. However, they may not pay out on a claim if, for example, the doors weren’t locked or the alarm wasn’t set.
Equally, the type of cover you choose – accidental damage, new-for-old cover and so on – will affect the price. You may also be able to choose a level of excess that reduces your premium.
What happens in an emergency?
It’s comforting to know the bills will be paid by your insurance company in the end, but some insurance policies offer emergency help too. These include things such as having boilers repaired, locks changed and emergency accommodation.