Home insurance buying guide
Whether you have a 1 bedroom flat or a 6 bedroom detached house complete with swimming pool and cinema room, your home is likely to be one of your most expensive assets. Just like your smartphone, your car and, of course, yourself, your home needs protection to ensure that if something goes wrong, you won’t be left to deal with the financial implications alone.
This is why you need a home insurance policy.
Home cover isn’t a legal requirement, but what if something happened to your house? Could you afford not to have insurance in place? To have a mortgage on a property your lender will usually require you to have a buildings insurance policy, but whether or not you take out a policy for additional contents insurance will be your choice.
Home insurance can give you peace of mind in the knowledge that, if your property is damaged or destroyed, it will be repaired or rebuilt without you having to fork out a fortune for it. It can also help you out if your much loved possessions are damaged or stolen, ensuring that you will be compensated for their loss.
So let’s run through some of the basics of home insurance. We’ll look at things like the different types of cover through to some tips on how to reduce your premiums, as well as expert advice on what you can do to protect your home.
What does home insurance cover?
There are typically 2 different types of home insurance: Buildings Insurance and Contents Insurance. Many people either opt to take out just buildings insurance on its own, or both buildings and contents cover as a combined policy. In some cases, you will only need one level of cover and different scenarios can influence your decision. Let’s go through these in more detail:
What does buildings insurance cover?
When considering buildings insurance, the first thing you should do is ask yourself the following question: ‘is it your building to insure?’
By this, we mean do you own your home, live in rented property, or in an apartment block where this may be covered by a service charge?
Before committing to a buildings insurance policy, it is crucial that you know this information, as you could end up paying a lot of money for something that you don’t need. Buildings insurance simply covers the structure, fixtures and fittings of a property (for example, the roof, ceilings, floors, walls, doors, windows and bathroom suites to name a few).
It’s important to read your policy documents for a full list of what is covered, as some even cover outdoor structures like sheds, greenhouses and garages.
Comprehensive buildings insurance is likely to provide cover for the following:
- Fire – if the property, or part of the property, is damaged by an accidental fire or arson attempt (including smoke damage)
- Storm damage – if the property is damaged following inclement weather (eg. damaged roofing or flood damage). Insurers may even pay for temporary accommodation while your home is inhabitable.
- Fallen trees – and any broken branches which cause damage to your property. Some insurers will also cover subsidence/heave caused by fallen trees.
- Earthquakes – some, but not all, insurers will cover earthquake damage in the UK. In many cases, they are not common enough to be included in your policy, but it’s worth asking if you’re concerned.
- Vandalism – if your property is targeted by vandals (for example, following an attempted break-in or childish prank)
- Plumbing/water damage – if accidental or sudden, your home insurance should cover you for any plumbing mishaps, but are unlikely to help if the damage is caused by old or leaky pipes.
Again, read your policy documents for a full rundown of your home insurance coverage, as this will vary from insurer-to-insurer.
READ MORE: What is the average cost of home insurance?
Statistically, 1 in 6 properties in the UK are located in a flood risk area, so checking that your home insurance covers you for loss and damage caused by flooding would greatly benefit you. This also goes for properties in an area at-risk of possible subsidence. However, something to keep in mind is that you could be facing a higher excess.
Common buildings insurance exclusions
While most buildings insurance policies tend to be pretty comprehensive, there are a number of scenarios in which an insurer may refuse to pay out after a claim. These include:
- Wear and tear – if your insurer deems any damage to be caused by general wear and tear, they may not pay out.
- Acts of terrorism – many people are unaware of this, but the majority of home insurance policies do not cover acts of war or terrorism. This can often be purchased separately from specialist providers.
- If left unoccupied – if your property is going to be left unoccupied for more than 30 days, your home may not be covered by insurance.
What does contents insurance cover?
Contents insurance covers you for your household possessions in the event of loss, theft or damage.
Typically, items covered would be the likes of:
- Electrical goods – such as TVs, kettles, toasters, games consoles etc.
- Entertainment collections – like DVDs, CDs and vinyl records
- Furniture – including sofas, tables, chairs and cabinets
- Flooring – carpets, tiling, laminate etc.
- Clothes – any clothes or accessories damaged or stolen
- White goods – washing machines, dishwashers, fridges, etc.
- Soft furnishings – curtains, bedding, cushions, etc.
Some insurers offer accidental damage as standard cover on policies, but in most cases, this is an extra option that you will be charged for.
Another important thing to remember is that there is likely to be a ‘per item’ claim limit (usually £1,500), meaning that any of your overly expensive items might not be fully covered. If you own a particularly expensive computer, bike or anything else of high value, you should state them individually when taking out a home insurance policy.
READ MORE: What’s the difference between building and contents insurance?
Additional cover for the personal possessions you take out of your home can also be added onto most policies, which is useful for providing extra protection for things like smartphones or bikes.
It is your own preference whether you take out contents insurance or not – the question is, if the worst were to happen, could you afford to replace items that cost you so much to purchase?
Common contents insurance exclusions
Contents insurance covers the majority of the goods within your home, but there are some situations in which you might not be covered. These include:
- Running a business – any business-related equipment (anything from laptops to bread makers) will not be covered unless you specifically state that you run a business from your home.
- Working from home – if you work from home, your work-related equipment might not be covered by contents insurance. Always state your situation when taking out a new policy.
- Subletting – when renting out a room in your home, you might be at risk of invalidating your contents insurance policy.
What is ‘new for old’ insurance?
Most home insurance policies are arranged on a ‘new for old’ basis – but what does this mean?
Basically, it means that when you make a claim on a damaged or stolen item on your insurance policy, the replacement you receive will be a new model of your old item (or as close as possible to it).
There are a few exceptions to this rule, with many insurers excluding items over a certain age (usually 10 years). In this case, if you claimed on an item which was manufactured more than 10 years ago, your insurance would only pay out its estimated current value.
How much home insurance do I need?
Buildings insurance – how much should I insure my house for?
Let’s start by looking at buildings insurance. Typically, insuring your building requires you to ask: ‘how much would this property cost to rebuild?’ – it is not the current market value of your home, and you would need to take into consideration the cost of labour and materials. If you live in a particularly unusual home, or even a period property, you will need to ensure your cover is high enough to rebuild your property.
It is important to remember that, if you extend your property in anyway, you must inform your insurer. Failing to do so could leave you with an underestimated value on your insurance cover and could see you fall short by several thousands of pounds in the event of a total rebuild. To work such a value out, the Association of British Insurers have an online calculator to give you some help and guidance.
Contents insurance – how much is my contents worth?
Putting a value on your contents insurance can be a little more head work. Don’t make the mistake of underestimating – you’ll be surprised at how much things can cost when they’re mounted up. The most straightforward way to help you calculate the cost of your contents would be to make a list of items in the rooms of your property (including outbuildings) and work out an estimated total worth of those items.
There are items which you will need to consider as being “high risk” and may require specialist cover, which will come at an extra cost. Items like coin or stamp collections, expensive works of art, jewellery, computers or expensive audio-visual equipment often fall into this bracket.
How do I find the best home insurance deal for me?
In recent years, the process of choosing a home insurance policy has been simplified. Insurers will usually try to find you the best possible policy for your needs, but they need a bit of co-operation on your part to do so.
A number of factors need to be considered before finding the right deal for you. Here are some tips:
- Be honest with your information – Insurers can’t offer you the best policy if you aren’t honest with the information about your home and contents. When it comes to insurance, trying to cut corners is never worth it, and usually results in your policy being void.
- Consider your finances – What is best for you and your finances right now? Don’t over-stretch your outgoings for a policy that may not be the right one for you. Shop around and see how much you can save.
- Don’t overestimate – We mentioned earlier about underestimating the amount of cover you need, but also remember that it can be costly if you overestimate. We all know how valuable our possessions are to us and the tatty old sofa you have had for 20 years may be worth its weight in gold to you, but for an insurance payout, it may not be. Consider what items you are insuring and what value you are putting against them.
- Don’t always go cheap – Cheapest does not always mean the best. Research the policy before taking it out and read the small print thoroughly. Sometimes it pays to go for a slightly more expensive policy – one that provides a sufficient level of cover.
- Change your excess – With any insurance policy, the higher the voluntary excess you opt for, the lower your premiums can be. Of course, be sure to set a reasonable excess value that you will be able to afford in the event of making a claim.
- Don’t pay monthly – Paying for your home insurance premium upfront will save you money. Opting to pay in instalments will see you charged interest as you are essentially borrowing money from the insurance provider to pay for your cover.
It’s always good to compare home insurance policies
When it comes to buying home insurance, there is no single ‘best’ policy, only the best policy for you.
In the current market, there are several companies committed to offering great home insurance deals, making it hard to know where to start. One piece of advice which we will always give to customers is that it always makes sense to go online and compare prices from as many providers as possible.
You can get a quote with us at Bobatoo – simply tap the green button below to receive a price for a bespoke home insurance policy today.
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