Home Insurance

Key Takeaways

• Home insurance can cover you for any financial impact in your home caused by fire, theft, or flood.
• There are many limits to home insurance and you may not find you have the cover you actually require.
• To cover items outside of the home, you may need to add further cover.
• Accidental damage does not often come as standard, be aware to check your policies to understand what you are and aren't covered for.
• Seeking advice is a good idea to check your policy won't be invalidated due to under-insurance when making a claim.

What is Home Insurance?

Home insurance covers you for the financial impact caused by events such as fire, theft, or flood in the home. It can be broken down into two main types, buildings, and contents insurance. However, it is possible to add further cover to your home insurance. This could include Accidental Damage, Cover for belongings outside of the home, and push-bike cover.

Is Home Insurance Expensive?

The cost of home insurance can be impacted by the age of your property, how many bedrooms you have and whether the property is detached, terraced or semi-detached.

You may be entitled to a no-claims discount for home insurance, even if you have changed provider. 

Home insurance policies normally carry an excess to each claim. 

What is buildings insurance and when is it needed?

Buildings insurance protects damages caused to the fixtures and fittings inside the home as well as the external walls.

In the UK, most mortgage lenders will require Buildings Insurance to be in place as a pre-requisite to agreeing on a mortgage. This should be in place at the point of Exchange of Contracts.

Exchange of contracts in the purchasing property process is the point when you become liable for any damage to the property.

There are exceptions to you needing buildings insurance, such as, if you are purchasing a flat on a lease. On a leasehold, generally, the building management company will insure the building, you would not be expected to insure a whole block of flats after all. 

Do You Need Buildings Insurance on a Flat?

It is important to check with the building management company and your insurance provider exactly what is and isn't covered. There are some cases when the cover provided can be limited to external walls. This means any fixtures inside of the property may not be covered in the event of a claim.

A fixture inside the property would be anything that is fitted. A good way to look at this is that fixtures and fittings are fitted, and cannot be moved. Fixtures & Fittings make up your belongings that are protected by your Buildings insurance. 

What is Contents Insurance and When is it Needed?

Contents insurance protects the belongings inside of the home that makes up the contents of the property. Anything that can be moved inside of the property is generally what is covered by your Contents insurance. It is important to understand that these belongings are only covered for events that happen inside the home. When you begin to take your contents outside of the home, it is usually not covered. 

Contents insurance is not a requirement for mortgage purposes.

Is Home Insurance Accidental Damage Cover Worth it?

If you are looking for more cover than standard, you can purchase an accidental damage cover.

Accidental damage can be added to Buildings and contents separately at an additional cost. It covers your belongings if they become damaged due to an accident around the home. This may be worth it for you if you have a young family or a household that is prone to accidents. A common claim for an accident would be spilling wine on the carpet.

When deciding if it is worth it, you should consider if you are the type of person who would make a claim and pay the excess, or find a cleaning product yourself to attempt to clean it.

Some home insurance policies now include a level of accidental damage as a standard.

Whether accidental cover is included as standard or not will impact the cost.

Luxury items and belongings outside of the home

Generally, when it comes to home insurance, a luxury item is one that is valued over £3,000 new for old. New for old means if you were to re-purchase that item again today, how much would it cost brand new? New for old takes into account the new value.

You must declare luxury items to your home insurance provider. You may then choose to insure these or not, but you may find you will not have cover as standard for these items.

If you take your items outside of the home, there is a limit set to how much you can claim for if an item is stolen. This is an add-on level cover and will add a further premium. However, it may be worthwhile having if you take electronic items outside of the home frequently or have children who do.

What else is included in Home insurance?

It is common now for Home insurance to include benefits for the following:

• Legal expenses cover - Should you find yourself unfairly dismissed at work, your home insurance may cover your legal fees
• Items in the garden - Any belongings left in the garden may be subject to a limit but are normally covered
• Cash - Cash in the home up to £500 is usually covered if you are burgled
• Alternative accommodation cover - If you need alternative accommodation due to a flood in your home, the expenses will be covered
• Jury service - Some insurances pay a flat fee to help with the expenses that arise as a result of jury service

Finding Home Insurance online

Not many people seek advice when it comes to home insurance. You need to ask yourself:

• Why it is that you are paying for home insurance?
• Do you know that you will definitely be paid in the event of a claim?
• What would the Financial and emotional impact be if your claim was not accepted?

It is easy to get caught up looking at price only that It becomes easy to forget what level of cover you actually need.

Realise that if you are reviewing comparison websites online for the cheapest option available, the level of cover will differ between providers.

You could end up without the insurance cover that you think you have.

Home Insurance Advice

It is a good idea to seek advice from an Insurance adviser, even if this is a quick conversation, they work with a panel of insurers but take the time to understand your circumstances, and can make a recommendation on what would be the appropriate home insurance policy for you, with any additional covers required.