Home insurance explained

The benefits of having home insurance

As with any kind of insurance, home insurance offers peace of mind. By paying a premium, you ensure that if you are broken into, or your home is damaged, the insurance company will help you pay the bill.

Home insurance, also known as house insurance, can cover things you might not even think of such as flood damage, subsidence, and fire, which could all cost thousands of pounds to recover from.

If you own your property you will be required to have buildings insurance for your mortgage, but if you rent your landlord should have their own buildings insurance. Although it is not compulsory to have contents insurance, it is advisable for both renters and property owners to do so.

Buildings insurance

Essentially, buildings insurance covers the cost of repairing or rebuilding your home in the event of it being damaged or destroyed. What your insurance covers varies from policy to policy; for example, you may be covered for fire damage, but not accidental damage. This is why it is important to read the details of every policy, and not just opt for the cheapest quote you find.  The uSwitch home insurance comparison service can help you find the right home insurance policy easily.

You also need to consider how much your home is worth – you may find cheap home insurance, but in the event of a claim, will it actually cover the rebuild cost of your home? Many homeowners overvalue the cost of rebuilding their home and end up with unnecessarily large premiums. The rebuild cost is not the same as the market value of the property.  It can often be found in your mortgage agreement, but, if your home is unusual in its construction you may need to get an independent rebuild quote from a surveyor to ensure you are properly covered.

Contents insurance

Contents insurance is exactly what it says – insurance for the contents of your home. If anything in your home is stolen or destroyed, contents insurance, with accidental damage cover, will cover its replacement. 10% of people in the UK don’t have contents insurance, and many others don’t have the right level of cover.  Contents insurance is not a legal requirement, but is a much needed safety net should something happen to the contents of your home.

It’s very important to be as thorough as possible when calculating your premium – go through every room in your home and list exactly what you would need to insure. Pay particular attention to small but expensive items like MP3 players and jewellery. Under ‘personal possessions’, some policies will cover these items for you outside of your home. This will add to the cost of your policy but can be worthwhile, as these items may spend more time outside your home than in it.

You then have the choice to take out accidental damage cover, which will cost extra, but the additional protection may prove worthwhile.

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