Protecting your home
Home insurance is a type of insurance product that protects your property and your belongings.
There are 3 main types home insurance policies
1. Buildings Insurance 2. Contents Insurance 3. Buildings & Contents Insurance
Buildings Insurance
Buildings Insurance covers the cost of repairing damage to your properties structure. This includes:
- Walls
- Windows
- Roofs
- Permanent fixtures & fittings such as bathrooms and kitchens
Typically Buildings Insurance covers the cost of rebuilding your home and it is therefore very important that you ensure the policy you take out covers the entire cost of this and that your estimated rebuild cost takes into account demolition fees, site clearances, architects fees, building costs etc.
Generally buildings insurance covers the cost of loss or damage that has been caused by:
- Fire, smoke, explosions
- Flood, storms, natural disasters
- Fallen trees, lamp posts, aerials or satellite dishes
- Vandalism or malicious damage
- Subsidence
- Vehicle or aircraft collisions
- Some policies also cover for outside the home, such as garages, walls and driveways
What are the different types of buildings insurance?
There are 2 types of contents insurance policy:
- Bedroom rated
- Sum insured
Sum insured
Sum insured cover is calculated by working out the cost of rebuilding your home from scratch. This amount should include professional fees and is NOT the same as your homes market value. The cost of building increases year on year so the rebuild price will increase so you may choose to index link your policy to take this into account
Bedroom rated
Bedroom rated cover estimates the cost of rebuilding your home based on the number of bedrooms you have. These types of policies protect you from under-insuring (as calculating a sum insured policy can be quite tricky) and provide very high sum-insured cover.
Bedroom rated cover means you don't have to worry about calculating the rebuild cost of your home. It's important to bear in mind though that you could end up over-insuring yourself and paying for cover that you might not need, but many see that as worthwhile compared to the risk of under insuring.
Other useful information
Accidental Damage
This happens when there's a one off unintentional incident that damages the structure of your property. For example, a ball through your window. Cover for accidental damage is usually bought as an addon to a policy as home insurers provide very limited protection as standard.
Typical exclusions include:
- General wear and tear
- Damage caused by failing to upkeep your property & letting it fall into neglect
- Bad workmanship
- Storm damage to gates, fences and plants
- Frost damage to outside pipes and brickwork
- Damage caused by insects, birds or other pests
Occupation
It is also useful to know that most insurance providers will only provide cover on the agreement that your home will not be unoccupied for more than 30 consecutive days. If you intend to do this you should update your provider.
Tenants
Tenants do not need to purchase Buildings Insurance as that is the responsibility of the landlord, however a Tenant should arrange their own Contents Insurance.
Contents Insurance
Contents Insurance covers the cost of replacing belongings that are either damaged, destroyed or stolen in your home.
Typical items included are:
- Furniture
- Kitchenware
- Entertainment devices
- Soft furnishing
- Clothes
- Jewellery
- Accessories e.g. handbags
- Ornaments
- Antiques
If and when you need to make a claim on your contents insurance your provider will pay out either on a 'new for old; or 'indemnity basis'.
New-for-old cover means your provider will pay out for a brand-new product of the same value if your insured item is damaged or stolen.
Indemnity cover takes into consideration wear and tear on the items that you claim for which means any pay-out will be reduced. Since the pay-outs on new-for-old policies tend to be higher, they can be more expensive than indemnity policies.
- Fire, smoke, explosions
- Flood, storms, natural disasters
- Fallen trees, lamp posts, aerials or satellite dishes
- Vandalism or malicious damage
- Subsidence
- Vehicle or aircraft collisions
- Some policies also cover for outside the home, such as garages, walls and driveways
What are the different types of contents insurance?
There are three main types of contents insurance policy;
- Bedroom rated
- Sum insured
- Unlimited sum insured
Bedroom rated
A bedroom rated policy uses the number of bedrooms in your home to calculate the amount of contents cover you get.
Sum insured
A sum insured policy requires you to calculate the amount of contents cover you need
Unlimited sum insured
An unlimited sum insured policy covers all of your contents without any limit so you don't have to worry about being under insured.
Other useful information
Accidental Damage
Accidental damage occurs when there's a one-off unintentional incident which impacts your contents, for example knocking a tin of paint over a sofa/carpet. This is often purchased as an add on to Home Insurance policies and will increase your premium.
Personal possessions cover
This protects your contents whilst they are outside of your home, and may need to be purchased an add on, typical items that would be covered with this add on include:
- Mobile phones
- Tablet
- Laptops
- Jewellery
- Handbag
Tenants
Tenants do not need to purchase Buildings Insurance as that is the responsibility of the landlord, however a Tenant should arrange their own Contents Insurance.
Buildings and Contents Insurance
Buildings & Contents Insurance is a combined plan suitable for homeowners (as Tenants do not need to arrange Buildings Insurance)
Other Insurances to protect your home
If you are doing a Buy to Let you may need to consider Landlord insurance as you are responsible for the structure of the building however contents insurance is optional as you may let the property furnished or unfurnished
Accident, Sickness and Unemployment insurance is a specific insurance policy that provides peace of mind that your mortgage payments and related costs will be paid in the event of you being unable to make them yourself due to the 3 aforementioned reasons.
