Should I get home insurance?
There's a whole host of different types of insurance out there, so it can be tricky to know what's what and what you actually need. So we've set to the task of answering the question on everyone's minds - should I get home insurance?
With the multitude of insurance companies, brokers and policies available in the world today, the concept of home insurance can be confusing. From differing types of home insurance policies, depending on whether you are renting or have purchased your home, to considerations like the amount of excess you require and direct debits and contracts, it’s no surprise people can find it hard to figure out where to begin. But, it’s an important thing to consider for your new house or flat.
What is home insurance?
Home insurance, similar to other insurance policies such as car insurance, financially protects your home and possessions in the event of damages or loss. Premiums can be paid in one lump sum (with a typical cover period of 12 months), or on a monthly instalment basis.
Types of home insurance
There are various types of home insurance, and the type of home insurance you require will depend on if you own your own home, are renting, and whether you want your belongings covered.
The main types of home insurance are buildings insurance, contents insurance and renters insurance. Beyond this, there are also other types of insurance, including temporary home insurance, landlord’s insurance and unoccupied home insurance - just to name a few. However, for most of us, it’s mainly buildings, contents and potentially renters insurance that should be considered.
Buildings insurance – what is it and what does it cover?
Buildings insurance is a type of home insurance policy which covers your property against damage to its structure, as well as to internal components such as the walls, ceilings, roof, and floors. This would mean that in the event of a fire, storm or flood damage to your property, you would be covered. The majority of buildings insurance policies also cover against damage caused by thieves and vandals.
Buildings insurance - What’s not covered
Whilst cover is generally comprehensive, buildings insurance does not protect you against normal wear and tear, intentional damage caused by you or your family members, and in some cases - if the insurer feels damage has occurred as a result of a lack of maintenance - they will not pay for damages. Insurance against your contents and personal belongings is not covered by a buildings insurance policy. You’ll need a contents policy for this.
How much does buildings insurance cost?
How much you pay for buildings insurance will depend on the value of your property and how much cover you require, where the property is located, and whether you are in a house, flat or bungalow. It will also depend on security features such as the particular locking mechanisms on your doors and windows, and whether you have an alarm system installed.
The typical cost for buildings insurance in the UK is around £120 a year, with savings to be made if you opt for a combined buildings and contents insurance policy. There are also additional factors to consider, such as whether you pay in monthly instalments and the level of your excess. Also, factors such as a higher excess can sometimes result in a cheaper overall premium - but this isn’t always the case.
Contents insurance – what is it and what does it cover?
Contents insurance provides you with cover against damages to or loss of your personal possessions. Quite simply, this type of policy covers that which is not physically linked to your home. So, belongings such as jewellery, laptops, mobile phones and clothing would fall under a contents insurance policy.
In the unfortunate event that the contents of your property are damaged or stolen, you will receive cover. In some cases, even your carpets are covered under contents insurance.
Contents insurance - What’s not covered
As with buildings insurance, there are exceptions to contents insurance policies in what is covered. A contents insurance policy would not cover you against general wear-and-tear to your belongings or any accidental damage. That being said, there are accidental cover policies which can be purchased separately or, in some cases, “bolted on” to your contents policy.
Further, a typical contents insurance policy will not cover you for loss or damage to your belongings when away from your home, and this option has to be added to your policy if required.
How much does contents insurance cost?
For insurers, the total value of your possessions and the covering of any extremely expensive or rare items will play a big part in assessing how much cover you need and the resulting premium. The average cost for a contents insurance policy with around £50,000 of cover is about £57 a year, and this can vary depending on your individual requirements and the minimum excess on your policy.
Should I get home insurance?
Whether you should get home insurance will depend on several factors such as whether you own your own home and the value of your possessions. If you rent your property, there will be no need for buildings insurance, yet you may want to consider contents insurance and possibly renters insurance.
If, however, you own your home and have a mortgage, it will likely be a requirement of the lender that you have at least a buildings insurance policy. In many cases, there are savings to be made by purchasing a combined buildings and contents insurance policy.
Summary
The two main “sub-insurances” when looking at home insurance are buildings insurance and contents insurance, with the former not being a requirement if you are a renter.
Buildings insurance is usually a stipulation of your mortgage lender, so is non-negotiable for the majority of homeowners. And, in the case of contents insurance, whether you should opt for a policy will depend on the value of your belongings - as well as the security being covered can bring you.
Whilst it is a cost, it may be a worthwhile investment considering you will have peace of mind knowing you are covered in the event of damage or theft to your prized possessions.