Building and contents insurance

Building insurance will provide you with the money to cover the costs of repairing or rebuilding your home should it be damaged or destroyed. If you are a landlord or a home owner then building insurance will be crucial, but if you are renting a property then building insurance is the responsibility of your landlord. However, as a tenant, you may wish to consider taking out contents insurance.

Building insurance will cover the structure of your home – but can also include sheds, garages and other external features. These features aren’t always included as standard, so make sure you check with your insurer in case you need extra cover.

A standard policy will usually cover you for the following:

• Floods
• Subsidence
• Theft/vandalism
• Fire
• Lightning damage
• Water damage

It’s important to remember that when you’re taking out building insurance – you need to cover your home for its rebuild value, not the market value if you were to sell it. Find out how to calculate how much home insurance you need.

Contents insurance will cover the cost of the possessions in your home should they be damaged or destroyed. A contents insurance policy will generally offer protection against the same perils as buildings insurance.

The most important thing you need to consider when calculating how much contents insurance you need is how much the contents of your home are actually worth. It’s likely that your contents are worth more than you think – you should go through every room in your house and note each item and its worth at today’s prices. The figure will usually come to well over £30,000 on average.

It is vital that you don’t assume all your possessions are covered within your contents insurance policy; some providers insist that high value items (for example items over £1000) must be insured separately from your main contents policy.
There are two different types of contents insurance:

• ‘New-for-old’ policies
• ‘Wear and tear’ policies

New-for-old policies will provide the full cost of repairing damaged items or replacing destroyed items. Wear-and-tear policies will repair damaged items but with a reduction for depreciation and are generally cheaper as the claims will usually be smaller.