Your home and your belongings in it, are some of the most valuable things you will ever possess. It is probably the biggest investment you will ever make (in the form of your mortgage) and would be extremely costly and difficult to replace if something were to happen to it.
Because of the high cost of rebuilding your home and/or replacing its contents, the concept of home insurance becomes vital to ensuring that you and your family do not suffer when problems occur. It provides you with the peace of mind that if the worst did happen, you would have the support you need to get things back on track.
What is Home Insurance?
Home Insurance is a collective term used to cover two types of insurance, namely Buildings Insurance and Contents Insurance. Sometimes the insurance is called Buildings and Contents cover.
Buildings insurance is designed to cover the actual building and the cost of permanent structures and the land that they stand on.
Contents insurance, on the other hand, is designed to protect your items of property that are within your house and any item that is not a part of the fabric of your home.
Buildings and Contents cover can be taken either together or as two separate insurances. Depending on your circumstances you may not need both elements of the home insurance.
Buildings Insurance and Cover
The building insurance element of house insurance is vital if you own your own home and may be a condition of your mortgage agreement (Because until your mortgage is fully paid off, the mortgage company has a vested interest your house).
Buildings cover is not normally required by tenants of rented properties. This is normally covered by your landlord as part of their insurances but you should check with your landlord and tenancy agreement if you are unsure.
The price you will pay for your UK buildings insurance will vary depending upon a number of factors including:
- Age of your home
- Location of your home
- Building materials
- State of the houses structure
- Stability of the land
- Level of Cover chosen
Generally speaking your buildings cover will protect you against events such as fire, flood, storms, falling trees and branches and malicious behaviour. Like most insurances, it will not cover you for the effects of war, terrorism, radioactive contamination or pollution.
Contents Insurance and Cover
Contents insurance is essential for everybody, whether you are a home owner or tenant, because it is designed to protect your belongings within the house.
It covers things like electrical appliances, jewellery and furniture but will also cover things that you might not necessarily think of like clothes, kitchenware, food from freezers and bedding.
The cost of replacing some of these items may seem minimal but imagine if you home was completely lost due to fire or flood. In this eventuality the replacement cost of all these items put together will rapidly become large and unmanageable for most families.
Usually, your contents insurance, will cover you against things like theft, damage by fire, damage by flooding, earthquake damage and vandalism. With some policies, cover will be offered for accidental damage and in some cases your contents insurance may cover your possessions when they are outside of your home. In any case, you will not be covered for wilful damage or damage caused by your DIY mistakes!
When asked to place a value on the contents of their home, most people will dramatically under value their possessions, in some cases up to 20%. This could leave you dangerously under insured and as such it is essential that your valuation is accurate and accounts for valuable and expensive items.
Not all home insurance policies are the same and in a lot of cases, insurance companies will offer additional and optional extras to their standard policies.
Optional extras like additional cover for antiques and valuable pieces of art, accidental damage, public liability and alternative accommodation may be offered by your insurance company for an additional premium.
Does house insurance have a 'No Claims Bonus'?
Just like with car insurance, some home insurance providers will take into account the number of years you have been claim free and offer a discount based on this. It is important that this is disclosed correctly to the insurance company to avoid problems if you need to make a claim.