Home insurance is peace of mind, though it also can be mandatory. Even if you don't have to ensure your home, it's a good idea to do so, whether you're planning renovation work or not. Find out more about the different types of home insurance that exist, and how to use it.
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. 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.
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.
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 – e.g. 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.
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.
What to consider when buying buildings insurance
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.’
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, advises, ‘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.
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.
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.
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). 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.