08 February 2016

What type of home insurance do I need?

If you’ve just bought your first home, or you’re in the process of buying, one of the most important things you’ll have to do before the moving in day is sort out your home insurance.

If you’ve rented previously, you’ll more than likely have had cover of some sort in the past, but being a homeowner comes with new insurance needs.

Buildings insurance

In rented accommodation, the landlord should have buildings cover in place, but as a homeowner that responsibility falls to you. Buildings insurance covers your home – the actual bricks and mortar and fixtures and fittings rather than the contents – from unforeseen circumstances like fires, floods and storms as well as issues like subsidence and burst pipes.

Not having buildings insurance in place could lead to you shelling out thousands of pounds to repair damage to your home if disaster strikes. If you have a mortgage, having buildings insurance is normally compulsory.

When you take out a buildings insurance policy, you only have to insure your house for its rebuild cost – which is often less than the price you paid for the property, as you already own the land. A chartered surveyor will be able to estimate the rebuild value of your house, or you may find it on the valuation report commissioned by your mortgage provider.

Contents insurance

Contents insurance covers your possessions for damage and loss. It’s not compulsory, but should be considered and you may have had some while renting, but it is even more important once you own your own home – and all the furniture and appliances in it.

Different contents policies cover different things, but typically you’ll be covered against theft, vandalism, subsidence, damage caused by fire or floods and storms.

There are 2 main types of contents insurance:

  • New for old: if you make a claim you’ll be covered to replace each damaged or stolen item with a new version.

  • Indemnity cover: you’ll be reimbursed the current value of the items you are making a claim for, so if their value has depreciated you may not be able to replace them.

You can take out different levels of contents cover, depending on the value of your possessions. It’s important to estimate the level you need as accurately as possible or you could end up underinsured.

Optional extras

There are a number of optional extras you can choose to take out as part of your buildings and content policies. These include:

  • Home emergency cover: With optional home emergency cover you'll receive extensive cover for a range of emergencies such as roof damage, vermin infestation, a burst pipe or a broken down boiler.

  • Legal expenses cover: This cover kicks in if you’re being sued or have to make a claim against someone in certain circumstances, for example if someone is injured in your home and takes action against you, or if you enter into a boundary dispute with your neighbours.

  • Accidental damage cover: You can get accidental damage for both buildings and contents policies. It ensures you are covered if you need to make a claim as a result of unintentional one-off incidents, such as spilling red wine and staining your carpet. General wear and tear isn’t covered by accidental damage insurance.

  • Personal possessions cover: Contents insurance doesn’t always automatically cover items once they are taken out of the home, so personal possessions cover can come in handy for things like watches, laptops, bicycles and jewellery.

  • No claim discount protection: Once you have reached a certain number of 'no claim discount' years you may be able to protect your 'no claim discount' at an extra cost.

Choosing the right policy

Different home insurance policies offer different levels of cover and have different exceptions, so it’s important to find the right one for your needs.

For example, some policies don’t cover damage caused by pets, while others include extras like accidental damage cover at no extra charge.

When it comes to home insurance, the cheapest policy isn’t necessarily the best option as it can cost you more in the long run if you end up under-insured.

Always check the policy terms and conditions to understand what limits and exclusions apply.

Find out more about our home insurance

Article updated on the 30 March 2016

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