There are two main types of home insurance, buildings and contents insurance. Buildings insurance is for protection against financial losses if the actual structure or permanent fixtures of your home are damaged or destroyed. Contents insurance gives you cover for the items in your home that would go with you if you moved. With lots of different policies available providing very different levels of cover, there are some things you should be aware of when buying a policy.
In buildings insurance it is of utmost importance that the full cost of rebuilding your property is covered and not just the market value. The land your house is built on is unlikely to be damaged by fire or flood, and it is often cheaper to rebuild a house on the existing plot than to buy another. Bear in mind that similar houses just a few streets apart may be worth different amounts, but rebuilding costs will be the same.
Your contents insurance must give enough cover to replace your belongings, so be careful not to under insure. This means that the maximum your insurer will pay is not enough to cover your losses. Your premium will increase with the amount of cover, but it would be a false economy to under insure because if you were unlucky enough to make a claim you would lose out financially.
To get an accurate idea of how much cover you need, take an inventory of your belongings, including gifts and homemade items, and work out the total. Look for new for old policies so that you get the cost of a new replacement item, not the value of your old used one which could be a lot less.
You may decide to opt for cover for the things that you take out and about with you. Mobile phones, laptops and jewellery can be covered by your house insurance even if they are lost or damaged away from the home. Also think about the contents of your garden, greenhouse and shed, are your tools and garden furniture covered?
Not all building insurance offers the same level of cover. Along with your house, check whether your buildings insurance covers you against damage to greenhouses, sheds and garages as these items can be costly to replace.
If you make any changes to your property, such as an extension or loft conversion, make sure that you inform your insurer and update your policy, otherwise you may lose out if your improvements are subsequently damaged or destroyed.
If you buy your buildings and contents insurance from the same company you may find it cheaper. Shop around and be aware that the cheapest cover may not be the best value for you, given that for a slightly higher premium you could be very grateful for the additional cover if you are unlucky enough to need it.
