There are two types of home insurance – home contents insurance and home buildings insurance.
Most people need home contents insurance to protect the things inside their home. Whether or not you need buildings insurance cover to protect the bricks and mortar of your home depends on whether you're a homeowner or not. Read on to find out more about the best home insurance for you.
Home contents insurance can protect items you have inside your home – the fixtures and fittings, your belongings and your valuables. The home contents insurance policy should cover you against theft, fire, flood or accident.
Some home insurance policies place limits on the value of single items, for example computers, jewellery or watches. So if you have a lot of valuable possessions you may need to be specific about the type and value of each one when you apply for a policy. You may have to pay a bit extra to cover high value items.
Some insurance policies also include, items away from the home, but you should check first to see whether this is included in your home insurance policy.
Buildings insurance can protect against damage to the fabric of your home. This might be due to fire or flood, subsidence, structural problems or damage due to accidents. Some policies also cover garages, sheds and fences, although you will need to check that these are included when you are applying for insurance.
Your insurance should cover the cost of rebuilding your home, although the sum insured is likely to be a lot less than the market value of your property.
If you're renting a property you don't need to have buildings insurance, as it's the responsibility of the owner to protect the fabric of the building against rebuilding or repair costs.
Everyone should have contents insurance, because even if you're a tenant you will need to be responsible for protecting your own possessions with your own insurance policy. While most people fear a break in, damage to fixtures and fittings by smoke, fire or water can cause a lot more costly repairs.
Home insurance is a relatively simple product, but you do need to look out for exclusions – these are events or occurrences that your insurance will not cover. For example, if you live near a river, you may not be able to get insurance cover for flood damage.
Your home insurance policy costs will also be affected by the value of your home or the contents within it, the location, the cost of rebuild, whether you have had any previous claims. Your premium will also be affected by whether you are prepared to accept a large excess, which is the share of the cost you pay before you receive insurance compensation.
The best home insurance policy is one that meets your needs and covers all the possible risks to your home and its contents.
In terms of home buildings insurance, you should definitely look at covering the cost of rebuilding your home and putting right damage after fire or flood, as this cost could be huge if you had to pay for it yourself.
In terms of home contents insurance there are a number of different options:
you can choose to replace your lost or damaged items with one of an equivalent value that is new (known as “new for old”)
or receive a pay out that is equivalent to their current value, which may not be the same value as an item that is new, but is a cheaper option
The average cost of home insurance in the UK varies depending on your location, type of house, and the amount that you need to insure.
How much home insurance costs also depends on the value of your possessions, but generally speaking, the cost of home contents insurance is around £130 a year (ABI figures for 2019). While buildings insurance premiums are an average £260. The average price for combined buildings and contents insurance is just over £300, according to the figures from the Association of British Insurers.
Some insurance companies offer a discount if you buy buildings insurance and home contents insurance together, but it's also worth getting separate quotes as this may work out cheaper.
Shop around for a cheaper home insurance quote. Your insurer will send you a renewal quote, but this is unlikely to be the cheapest available, so make sure you compare what's on offer from different insurance companies. Sometimes you can get discount home insurance if you buy the policy online.
Many insurers will offer cheaper home insurance premiums if your house is occupied a lot of the time. If you go on holiday for more than 28 days at a time and leave the property unoccupied, they will charge you more.
Claims: Don't make a claim on your home insurance unless you have to. The fewer claims you make the lower your premium will be. Check whether your insurer offers a no claims discount, which will save you money on future premiums.
Security: Make your home secure. Fit good quality locks to all accessible doors and windows and consider fitting a burglar alarm. If there's a Neighbourhood Watch scheme in your area make sure you join it.
Smoke alarms: Fit, and regularly test, smoke alarms. Smoke alarms only cost a few pounds and you can sometimes get them free from the fire service.
Excess payment: Increase the excess. The excess is the amount the policyholder pays on a claim before the insurance kicks in. The higher the excess you opt for, the lower your home insurance premium will be.
If you're thinking of moving, check the area to make sure there is a low flood risk at the Environment Agency's website.
You also need to think about getting buildings insurance when you're in the process of buying a new house. To be safe, it's a good idea to have buildings insurance from the point at which you exchange contracts.
You will need home contents insurance from the point at which you complete the house purchase and receive the keys to your new home.