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.
It is extremely important that your building insurance policy gives you cover for the whole cost of rebuilding your property and not just the market value. This will protect you from fluctuations in the property market and will usually give you a cheaper premium. The land your house stands on is not likely to be badly affected by fire or flood, and it is often much less costly to rebuild a house on the existing plot than to buy another. Remember that similar houses may be worth different amounts even if they are only a few streets apart, but the cost of rebuilding will be the same.
Contents insurance needs to give you 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 be higher if you need more cover, but it is a mistake to under insure because if you do need to make a claim you will 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?
Different buildings insurance policies give different levels of cover. In addition to the house, look for policies that include outbuildings like your greenhouse, shed and garage, which can be expensive to repair.
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.
Look out for discounts if you buy your contents and buildings insurance from the same provider. Do shop around and remember that the cheapest cover may not be the best value, and for a slight increase in premium you may be very grateful for the additional cover should you be unlucky enough to need it.
