In our previous blog, we looked at the different types of protection policies available for you – to insure against death, critical illness and loss of income. This month we take a more detailed look at protecting your home and the different types of home insurance policies that are available. Home Insurance is designed to protect your property and belongings against various risks, providing financial security in case of damage, theft, or other unforeseen events. The Financial Conduct Authority definition can be found here. There are two primary types of home insurance: Buildings Insurance and Contents Insurance, and they can be purchased separately or as a combined policy. Many insurers offer a small discount when taking out a combined policy. So, when do you need home insurance and what cover is available?
What is Buildings Home Insurance and what does it cover?
This policy covers the physical structure of your home. It typically includes coverage for structural damage, such as fire, flood, storm damage, subsidence, and vandalism. Buildings insurance typically covers permanent fixtures of a house as part of the structure coverage. Imagine picking up your house and shaking it – everything that wouldn’t fall out! These permanent fixtures include:
- Walls: The structure of the building, including interior and exterior walls, are generally covered.
- Roof: The roof of the house is usually covered against specified perils like storms, fire, or vandalism.
- Floors: This includes the permanent flooring within the house, such as hardwood, tile, or carpet.
- Ceilings: Both the interior and exterior ceilings are typically covered.
- Built-in Appliances: Permanent fixtures like built-in ovens, stoves, and dishwashers are usually covered.
- Bathroom Fixtures: Permanent fixtures in bathrooms, such as bathtubs, showers, and toilets, are generally covered.
- Built-in Cabinets: Kitchen cabinets and other built-in storage units are typically covered.
- Foundation: Coverage often extends to the foundation of the house.
- Garages: If the garage is attached to the house, it may be covered as part of the structure. Detached garages may require additional coverage.
Buildings insurance is based on the cost of rebuilding your home, not its market value. Therefore, the amount of cover should be enough to rebuild your property in case of significant damage. You may need to consult a surveyor to determine the rebuilding cost accurately. There are policies that offer unlimited cover – so that you never run the risk of being underinsured.
You can often include extras like accidental damage coverage, legal expenses cover, or home emergency cover, depending on your insurer. Accidental damage cover in a building insurance policy typically provides protection for sudden and unforeseen events. The specific coverage can vary between insurance providers, so it’s important to check your policy documents for precise details. However, common things that might be covered under accidental damage insurance for buildings can include DIY accidents, like accidentally putting a foot through the ceiling while in the attic, glass breakage, such as windows or glass doors, or accidental damage to fixed appliances, like a fitted oven or dishwasher, caused by an accident.
What isn’t covered under a buildings insurance policy?
Policies will detail the things that are not covered – these are called exclusions. It’s important to be aware that intentional damage, wear and tear, and damage resulting from a lack of maintenance are typically excluded from accidental damage cover. So, keeping up with ongoing maintenance of things like the roof and external walls of the property is essential. Additionally, certain events or perils may be excluded, so you may need to consider additional coverage for specific risks, such as floods or earthquakes, which may not be included in a standard policy.
Do I have to have Buildings Insurance?
While it’s not a legal requirement, many mortgage lenders in the UK make it a condition of the mortgage agreement that the homeowner has buildings insurance in place. Most mortgage providers typically require borrowers to have buildings insurance in place before the completion of the mortgage transaction. The exact timing may vary, but it’s a standard practice for lenders to receive confirmation that cover is in place to protect their interest in the property. During the mortgage application process, lenders might ask for details about the insurance cover that you intend to have on the property. They may ask for confirmation that you’ve secured a suitable buildings insurance policy. After the buyer and seller exchange contracts, the buyer is legally committed to purchasing the property. At this stage, the buyer usually needs to have insurance in place, as they are considered responsible for the property.
If you own your property outright, then you don’t need to have buildings insurance in place. You are also unlikely to require buildings insurance when the property you own has a shared building insurance policy. For example, an apartment complex might have a shared buildings insurance for the entire development. The cost of this insurance is usually included in the property service charges.
Even if you own your property outright and are not required by a mortgage lender to have buildings insurance, it’s still a good idea to protect your investment and provide financial security in case of unforeseen events.
What is Contents Home Insurance and what does it cover?
Contents insurance is designed to protect your personal belongings inside the home. Unlike buildings insurance, contents insurance is not typically a requirement set by mortgage lenders. Contents insurance covers the cost of replacing or repairing your personal possessions in the event of damage, theft, or loss. This includes items like furniture, clothing, electronics, jewellery, and other valuables. Again think about picking up your home and shaking it – it’s all of the things that would fall out! Here are the items most commonly covered under a contents insurance policy.
- Furniture: Sofas, beds, tables, and other furniture are typically covered.
- Electronics: Coverage for items like TVs, laptops, and sound systems.
- Clothing: Your wardrobe is usually protected against damage or theft.
- Jewellery and Valuables: Higher-value items may be covered, but there might be limits, so additional coverage may be necessary.
- Personal Belongings: Everyday items, such as books, kitchenware, and decor, are usually included.
Contents cover is usually for a set amount. The amount of coverage you need depends on the value of your personal belongings and the cost of replacing them. It’s essential to accurately estimate the value of your possessions to ensure that you have enough cover in the event of theft, damage, or loss. Create a detailed inventory of your possessions, including furniture, electronics, clothing, jewellery, appliances, and other valuable items. Assign a value to each item in your inventory. For items like jewellery or high-end electronics, you might need professional valuations. Add up the values to determine the total worth of your possessions. This total represents the amount of cover you should aim for in your contents insurance policy. Coverage amounts for contents insurance typically range from £20,000 to £100,000 or more, depending on the value of your possessions. This can be influenced by the size of your property – the more rooms you have, the more items you are likely to own, as well as the need to decorate and furnish more rooms. It’s important to strike a balance between ensuring you have enough coverage for your belongings and avoiding over-insurance, which could result in you paying more.
Just like buildings insurance, contents insurance policies are available as standard cover or with accidental damage. A policy with accidental damage often includes coverage for things like accidental breakages of covered items, such as dropping your laptop or breaking a vase, protection against spills and stains on carpets and furniture, or damage caused by pets, such as a cat knocking over a TV.
What isn’t covered under a contents insurance policy?
Some policies may have specific limits on certain types of items, for example, high-value jewellery, art, or antiques, so you may need additional coverage for these specific items. For example, you have a piece of jewellery that is worth £5,000 but the limit for high-value items is £2,000. In this case, for the item to be covered you would need to mention this specific item and perhaps show proof of its value. You should also check the policy for details of the time of cover. Some policies with pay for the value of your possessions at the time of the loss, accounting for depreciation. So, if the item is 10 years old it may not be worth what you paid for it or what it would cost to replace it now. Others offer cover on a “new for old” basis. They will pay the cost of replacing your items with new ones of similar kind and quality, without accounting for depreciation. And again like building insurance, wear and tear isn’t covered. So, if your TV stops working, or your laptop breaks down, these things won’t be covered.
Some policies offer additional coverage for items temporarily taken out of the home. Or for items that are stored in outhouses, sheds and garages. Like all insurance policies, it’s important to know what you are covered for.
Do I need contents insurance?
Contents insurance can be arranged at any time, but it’s advisable to have it in place as soon as you move into a new property or own valuable possessions. While it’s not a legal requirement, it’s highly recommended, especially if you own valuable items that you would struggle to replace in the event of theft, damage, or loss. Remember to carefully review policy documents, including coverage limits and exclusions, and consider adding additional coverage for high-value items if needed.
The 177 Mortgages Advantage for Home Insurance
So, why choose 177 Protect for your home insurance policies? Here’s what sets us apart:
- Expert Guidance: Our experienced advisors can help you choose the right amount of coverage and the type of policies tailored to suit your needs.
- Wide Range of Options: We have access to a diverse range of home insurance policies from leading providers, ensuring you find the coverage that suits your requirements. With discounts available for taking more than one policy with the same provider.
- Unbiased Advice: At 177 Protect, we don’t charge fees for our services. Our goal is to provide you with impartial advice that prioritises your financial well-being.
- Ongoing Support: We’re not just here to set you up with a policy and then disappear. We provide continuous support, and available to answer any questions that might come up in the future.
At 177 Mortgages and 177 Protect, we understand that your home is one of your most significant investments. Protecting it and ensuring that you have the right level of cover is important. Our team is dedicated to making the complex world of insurance simple and easy to understand. Contact 177 Protect today, and let’s make sure you, your home and your possessions are protected.