Home insurance covers you for the financial impact caused by events such as fire, theft, or flood in the home. It can be broken down into two main types, buildings, and contents insurance. However, it is possible to add further cover to your home insurance. This could include Accidental Damage, Cover for belongings outside of the home, and push-bike cover.
The cost of home insurance can be impacted by the age of your property, how many bedrooms you have and whether the property is detached, terraced or semi-detached.
You may be entitled to a no-claims discount for home insurance, even if you have changed provider.
Home insurance policies normally carry an excess to each claim.
Buildings insurance protects damages caused to the fixtures and fittings inside the home as well as the external walls.
In the UK, most mortgage lenders will require Buildings Insurance to be in place as a pre-requisite to agreeing on a mortgage. This should be in place at the point of Exchange of Contracts.
Exchange of contracts in the purchasing property process is the point when you become liable for any damage to the property.
There are exceptions to you needing buildings insurance, such as, if you are purchasing a flat on a lease. On a leasehold, generally, the building management company will insure the building, you would not be expected to insure a whole block of flats after all.
It is important to check with the building management company and your insurance provider exactly what is and isn't covered. There are some cases when the cover provided can be limited to external walls. This means any fixtures inside of the property may not be covered in the event of a claim.
A fixture inside the property would be anything that is fitted. A good way to look at this is that fixtures and fittings are fitted, and cannot be moved. Fixtures & Fittings make up your belongings that are protected by your Buildings insurance.
Contents insurance protects the belongings inside of the home that makes up the contents of the property. Anything that can be moved inside of the property is generally what is covered by your Contents insurance. It is important to understand that these belongings are only covered for events that happen inside the home. When you begin to take your contents outside of the home, it is usually not covered.
Contents insurance is not a requirement for mortgage purposes.
If you are looking for more cover than standard, you can purchase an accidental damage cover.
Accidental damage can be added to Buildings and contents separately at an additional cost. It covers your belongings if they become damaged due to an accident around the home. This may be worth it for you if you have a young family or a household that is prone to accidents. A common claim for an accident would be spilling wine on the carpet.
When deciding if it is worth it, you should consider if you are the type of person who would make a claim and pay the excess, or find a cleaning product yourself to attempt to clean it.
Some home insurance policies now include a level of accidental damage as a standard.
Whether accidental cover is included as standard or not will impact the cost.
Generally, when it comes to home insurance, a luxury item is one that is valued over £3,000 new for old. New for old means if you were to re-purchase that item again today, how much would it cost brand new? New for old takes into account the new value.
You must declare luxury items to your home insurance provider. You may then choose to insure these or not, but you may find you will not have cover as standard for these items.
If you take your items outside of the home, there is a limit set to how much you can claim for if an item is stolen. This is an add-on level cover and will add a further premium. However, it may be worthwhile having if you take electronic items outside of the home frequently or have children who do.
It is common now for Home insurance to include benefits for the following:
Not many people seek advice when it comes to home insurance. You need to ask yourself:
It is easy to get caught up looking at price only that It becomes easy to forget what level of cover you actually need.
Realise that if you are reviewing comparison websites online for the cheapest option available, the level of cover will differ between providers.
You could end up without the insurance cover that you think you have.
It is a good idea to seek advice from an Insurance adviser, even if this is a quick conversation, they work with a panel of insurers but take the time to understand your circumstances, and can make a recommendation on what would be the appropriate home insurance policy for you, with any additional covers required.
Contents insurance is optional. If you have expensive items in your property that you would want cover for in the event of fire, theft, or flood then you should consider contents insurance.
Generally, on a basic level of cover, your items individually will be covered up to around £3k, ‘new for old’. This cover is only for items that are inside the house. Once you take your items outside the level of cover can change. It's important to understand the level of cover you are paying for when purchasing contents insurance.
Accidental damage cover can be applied to both buildings and contents. It covers the cost of replacing items that have been damaged by accident. Some policies offer accidental damage as a standard level of cover. Be sure to understand what you are and aren't covered for when you purchase your buildings and contents insurance. An example would be, spilling wine on the carpet. This is an accident, and you could claim the costs of a clean, or a replacement carpet if needed.
It is common to get caught up looking only at price when renewing your home insurance. Policies can vary between providers and that will impact the costs. Do you know that you are covered for what you think you are? When did you last properly review your policy to make sure of this? An insurance specialist will be able to assess your needs and make an appropriate recommendation based on what you have said you would require cover for.
With home insurance policies you are set a maximum cover limit. This is the maximum payable. In the event of a fire, if all your belongings need replacing, would this limit cover you? If it wouldn’t, you are underinsured. The risk with being underinsured is when you make a claim, it is possible that the insurance provider voids your policy for not having the correct amount of cover. If they do not void the claim, they may reduce the claim amount based on the % you have covered correctly. Polices are now offering unlimited cover. A policy with unlimited cover would avoid any chance of under-insuring yourself for a full claim.
Policy to policy there will be different limits for different types of items being claimed. An example would be, £2,000 for garden items. Another would be £500 for cash. It is important to understand the individual limits of your policy and how this could impact you in the event of a claim. If you have an item that is worth more than the relevant limit, you will need to declare that item as part of your insurance policy to have it quoted correctly.
Whether accidental damage cover is worth having will depend on a few things. First of all, it's important to understand what exactly would and wouldn’t be covered under your policy. Then there are some points to consider including… Are you the sort of person to make a claim on your insurance or more likely to get stuck in, cleaning/fixing damaged items? What is the excess to make a claim? Will it impact your no-claims discount? Are you at more risk of accidents, do you have young children causing chaos?