Home insurance: a comprehensive guide

The ins and outs of home insurance explained; find out what's covered and how to get the best deal

home insurance: Clad extension with sliding doors and a separate door to outside
(Image credit: IDSystems)

Home insurance is an essential consideration, whether you are buying your first or fifth home, or building a self-build. Regardless of whether your home needs renovating or is ready to move into as is, home insurance can cover you for eventualities that could potentially seriously put you out of pocket and/or put you into financial difficulty. 

While renovations insurance covers you specifically for problems that may arise during a big renovation project, home insurance has a more general purpose, with a variety of different types and clauses to suit different properties and life situations. Take a deep dive into the world of home insurance to determine what type of cover is the best for you. 

Home insurance: building insurance vs. contents insurance

There is one crucial difference between building insurance and home contents insurance: the former is mandatory if you are taking out a mortgage on a home. Buildings insurance will cover the permanent fixtures and fittings in your home, including kitchens and bathrooms, and the structural elements such as walls and roofs. 

Contents insurance covers the personal possessions inside your home that you don't take outside, which includes furniture, TVs, and other appliances. Unless stated, it does not cover items such as jewellery or cameras, which you can insure under an optional extra clause in your insurance for an additional charge. In general, it's very important to read the list of excluded items before deciding if you want to pay extra.

You can also get combined building and contents insurance packages. And, some home contents insurance will cover items outside the home – you just have to check rather than assume.

Find the right home insurance at a price you can afford

Think about the total value of rebuilding or replacing what you own, plus any additional cover you need, such as for accidental damage to furnishings and protection of personal items when you’re away from home. You’ll also need to consider the amount of any claim you’re willing and able to pay yourself, which will form the excess. In essence, you need to consider whether the policy provides suitable cover for your specific needs at a price you can afford.

How much is home insurance per month?

There are several variables that will affect your home insurance monthly premiums. Steve Moores, Client Director at independent Chartered Insurance Brokers Aston Lark, explains that 'home insurance premiums can vary from £100 a year to thousands of pounds, depending on the size and location of your home and the value of your contents and jewellery. 

Comparison sites will usually give you an approximate idea of the cost, but the final premium can often work out more, once options such as Accidental Damage cover, Legal Expenses and Home Emergency cover have been added.'

Top tip: increase your excess to help keep the premium down. 

What is covered by accidental damage cover?

You'll need to see whether the accidental damage clause in your insurance policy covers both damage to the building – e.g. windows, external structure, plumbing and pipework, toilets and sinks – and home contents such as a broken TV or sofa. Accidental damage typically won't cover damage caused by pets, or damage to items that are routinely used outside the home, such as your bike. 

Shop around for the best deal on home and contents insurance

Homeowners are more likely to shop around for their insurance than a bank account, mobile phone contract, loan or mortgage, according to the Association of British Insurers (ABI), showing how competitive the marketplace for home and contents insurance has become. Use comparison websites or check around five individual suppliers before committing to a policy to ensure you get the best cover for you at the best price.

Ceri McMillan, the home insurance expert at GoCompare, has the following top tips for finding the best home insurance deal online:

  1. To get a good deal on your home insurance, 'shop around for the right cover every year and avoid falling into the auto-renewal trap. There is a wide range of insurance companies in the market who all quote for different risks and provide different levels of cover, so it’s absolutely worth shopping around.'
  2. 'Even if your renewal price from your current insurer is similar to what you paid last year, you still might be able to get a better deal by using a price comparison site – and it's also important to make sure your information is up to date and that you've declared the up to date information for the value of your home, your contents and valuables and circumstances to make sure you get the right cover for you.'
  3. 'Look to purchase your policy around 21 days from your renewal date, or when you need the insurance to start from, and if its affordable, try to pay annually.'
  4. If you need both contents and building insurance, 'consider combining these as it’s often cheaper to buy both at the same time and only pay for the cover you need and take care with packaged add-ons.'

When to take out home insurance if you're buying a property

If your property is mortgaged, your lender will require you to have buildings insurance in place. This cover is likely to need to run from the date of exchange of contracts up to the full term of the mortgage.

Even if you plan to do up the house before moving in, you should also take our home contents insurance to cover anything left on site.

Buying building insurance for an older home

You need to cover the building’s reinstatement value rather than its market value. For a listed or period home, you will usually need insurance from a specialist broker. Online comparison insurers often don’t ask the right questions, for example the materials the property is constructed from or whether it is listed. Assumptions may be made that could leave you uninsured. For listed buildings, you’re also responsible for any work done by previous owners and LPOC offers protection for this.

Check your insurance covers renovations

Having the correct renovations insurance is vital, whatever type of refurbishment you are doing, from extending a kitchen to revamping the whole house. Always ensure you’re covered for the work involved and that any traders working on your property have a certificate of public liability insurance. It’s your builder’s responsibility to make sure the site is safe to work in, but it’s always best to ask for proof of cover.

Before work starts, phone your insurer to check what your policy covers in terms of renovating and ask whether there will be any changes to your excess for the duration. Many insurers won’t cover you if you move out of the property during the renovation, so you may need to arrange a separate contents insurance policy for when you’re living elsewhere.

Keep insurance premiums low with good maintenance

Especially key in the winter months, staying on top of household maintenance tasks and making repairs when needed will help to reduce costly damage, as well as keeping your home insurance premiums low. 

‘While we cannot control the weather, we can reduce its impact by taking a few common sense precautions now to make our homes more resistant to the winter,’ says Mark Shepherd, manager of general insurance at the ABI. ‘Home insurance can, of course, cover the cost of weather damage, but it cannot compensate for the distress and inconvenience when bad weather strikes.’

To mitigate damage, make sure you do things like turning off outside taps to avoid frozen, burst pipes; clearing gutters and drains to limit water damage; check the exterior of your home for wear and see if you need to do any roof repairs.

Add valuables to your contents insurance policy

Whenever you buy or receive electronic gadgets or products that hold a significant value, make sure these valuables are added to your contents insurance policy to ensure they are covered in case of theft or damage. Figures from CompareTheMarket.com showed that the average UK home contains £45,000 worth of contents.

Laura Hughes, the ABI’s policy adviser for general insurance, cautions that 'thieves especially love Christmas and are on the lookout for easy targets with popular gifts, including smartphones, tablets and digital gadgets, on the top of a thief’s Christmas list. Immediately after Christmas, check the value of your presents, such as electronic gadgets, to see if you may need to increase the value of your contents cover.’

Use the same insurance provider for home and contents to negotiate a better deal

Consider taking out buildings and contents insurance with the same supplier and haggle for a better deal. Businesses want your custom, so you could reduce your premium by tailoring the policy to your needs, cutting out any areas that won’t apply to you or your home. For example, accidental damage cover could increase premiums by up to 25 per cent, according to CompareTheMarket.com. Increasing the voluntary excess could also significantly reduce the cost of a new policy, but bear in mind that this will increase the amount you have to pay if you make a claim.

Think carefully about sacrificing a no-claims bonus

If your excess is high and you need to make a claim, find out how much it would cost to repair any damage yourself before contacting your insurance provider. In some cases, where the repair is minor, it’s better to use your savings to rectify the problem than sacrifice your no-claims bonus.

Watch out for ‘artificially low’ insurance premiums

While attractive to consumers, low premium prices could mean cover isn’t sufficient, so read through policy details carefully before signing up. You could be stung by a huge excess or missing perks.

Janet Connor, managing director of AA Insurance, says, ‘There are deals to be done for those who shop around for their cover. Families must ensure that their policy meets their needs – because a cheap price doesn’t necessarily mean value for money.’

Your shed may need insurance cover, too

Do you have a shed, garage, summerhouse or garden building? If so, these will need to be included in your home insurance policy to ensure the structure and contents are protected. ‘Most home insurance policies will provide some cover for damage to the structure of sheds, garages and other outbuildings and for loss or damage to the contents inside, however, the extent and the amount of cover may vary greatly and seeking the advice of an insurance broker will help in arranging appropriate cover,’ says Pam Quinn, from the British Insurance Brokers’ Association.

Also check whether your contents insurance covers things in your garden such as hot tubs and garden furniture. These won't be secured down, so while hard to steal, it isn't unheard of.

Is your shopping covered by your contents insurance?

‘At Christmas in particular, households may have a higher than usual volume of contents and most insurance policies will automatically increase the contents sum insured by 10 or 20 per cent for the weeks around the festive season,’ Pam Quinn, from BIBA, explains. ‘But in general, it’s also worth thinking about the value of items you may have in your car and on your person while you are shopping, and ensuring you take care of these items as the cover on your home insurance may have a limit that is less than the value of your Christmas or sales shopping.’

Think about home insurance when you buy travel insurance

If you are heading away for a break, bear in mind that it could spell trouble at home, particularly in winter when there's a greater potential for burst pipes and the ensuing, untold damage. Check with your broker to see if your insurance company has special conditions, such as leaving your heating on at a minimum level or lagging pipes to prevent freezing.

Can safety features bring your insurance premiums down?

If you're planning home improvements that will make your home safer, it's worth letting your insurance company know. Fireproofing your home by fitting smoke alarms and fire extinguishers as well as installing burglar alarms and security systems could reduce the amount you pay for contents insurance, according to Gareth Kloet, head of utilities at Confused.com.

If you add water sprinklers for fire safety make sure the water damage as a result of them going off is covered. It should be, but you may need to flag their installation when you take out the policy.

Compare the cost of last year’s insurance premiums when renewing

When renewing your policy, any renewal correspondence received from your provider should include details of your previous premium as well as the new offer. The Financial Conduct Authority (FCA) has published its proposal to insurance firms in a bid to make renewal notices simpler and help you compare the cost from one year to the next, plus give you grounds to negotiate a better deal. 

‘It is important that insurers give their customers the information they need to do this and ensure they’re treating their customers fairly,’ Christopher Woolard, director of strategy and competition at the FCA, says.

What to consider when insuring a new build home?

The benefit of a new property is that most come with a 10-year guarantee from the construction company (check the guarantee carefully before signing the paperwork). However, this is not a replacement for building insurance.

Watch out for properties on flood plains or near rivers, as buildings insurance can be considerably higher in these areas.

What to bear in mind when insuring a self build?

If you’re buying a plot to self-build, you will need specialist insurance and should arrange your policy to start as soon as you buy your plot of land or renovation property – at this point you are liable for injuries to members of public on your site. Even if your main contractor has its own site insurance, you will need public liability cover in advance of them starting work and when they are not on site.

Who are the best home insurance companies UK?

Steve Moore's view is that 'there is no “best” home insurance company. What’s best for one home, may not be the best for another. A good home insurance broker will help you find an insurer and a policy which best suits your needs. So that in the event of a claim, you’ll be properly covered. And a broker will have checked the financial rating and service of the insurer beforehand.'

If you do need a bit of guidance, consider reading reviews or consulting the People’s Choice Insurance Awards, which is run by GoCompare. 

Is home insurance worth it?

The short answer is yes, home insurance is aboslutely worth it. Moores says that 'in exchange for small annual premium, insurers will take on a large financial risk from day one of your policy. If your home were to suffer a house fire, could you afford to rebuild it? Where would you live in the meantime? Home insurance takes away this worry. The UK home insurance market gives you plenty of choice of  insurers and premiums and you’ll be covered for a wide range of eventualities.'

Anna is a professional writer with many years of experience. She has a passion for contemporary home decor and gardening. She covers a range of topics, from practical advice to interior and garden design.