How much home insurance do I need?

Do I need home insurance?

Strictly speaking, no one’s going to force you to take out home insurance. Unless you’ve got a mortgage — in which case your lender may require that you have buildings insurance at the very least. 

Home insurance usually comes in 2 parts: buildings insurance and contents insurance. You can buy these separately or together in a combined policy, depending on what suits you.

• Buildings insurance covers the actual structure of your home - the bricks, roof, windows, and permanent fixtures like your kitchen and bathroom.
• Contents insurance protects your belongings, the stuff you’d take with you if you moved house. Think furniture, gadgets, clothes, jewellery, that sort of thing.

The level of cover you need depends on your home, what’s inside it, and what would give you confidence that you’re protected. Too much insurance? You could be overpaying. Too little? You might end up covering the shortfall yourself after a claim.

How much contents insurance do I need?

Here’s where a bit of effort up front can really pay off. The idea is to work out how much it would cost to replace everything you own in the house at today’s prices. Not what you paid for it or what it’s worth now and what it would cost to go out and buy new.

Calculating the value of your home contents

This might sound tedious, but it’s easier than you think. Go room by room, including the loft, shed and garage - anywhere you keep stuff and jot down rough values. Furniture, electricals, clothes, kitchenware, sports kit and tools it all adds up surprisingly fast.

And here’s the bit people often forget: things like curtains, carpets and rugs are usually classed as contents too.

When you’re done, add on a little buffer. Prices go up, after all. If in doubt, it’s better to overestimate a little than risk being underinsured.

Some contents policies limit the payout for individual valuable items like jewellery or expensive bikes. So if you’ve got anything particularly precious, you might need to list it separately or look at extra cover.

How much buildings insurance do I need?

The key thing to remember here is you’re insuring the rebuild cost of your home, not its market value.

That means what it would cost to completely rebuild your property from scratch if it was destroyed by a fire or flood. And that figure is usually quite a bit less than what your house would sell for.

If you’ve got a mortgage, your lender might give you a figure. Or you can use a rebuild cost calculator like the one on the Association of British Insurers site. You’ll need to know details like the type of property and when it was built.

Remember to update your buildings insurance if you do any major work, like an extension or a loft conversion, so your cover keeps pace with your home’s value.

Home insurance add-ons

Once you’ve sorted the basics, you might want to think about extra cover. Here are a few common options:

• Accidental damage – covers you for those moments when life happens like spilling paint on the carpet.
• Personal possessions cover – protects items you take out and about, like your phone, laptop or jewellery.
• Legal expenses cover – helps with the cost of legal advice or action, for example, if there’s a dispute with a neighbour.
• Home emergency cover – gives you access to tradespeople for urgent repairs, like a broken boiler or burst pipe.

Add-ons can be useful, but only if you’ll actually benefit from them, so it’s worth weighing up the extra cost carefully.