Home insurance is not a legal requirement but it is a policy that you should consider to ensure you are protected against theft or damage to your home.
In this article, we explain what home insurance is, how it works and whether you need home insurance. We also explain what to look out for before purchasing home insurance and the best way to buy home insurance.
1 minute summary
- Home insurance can insure your property or your belongings against damage, loss or theft.
- There are two types of home insurance; building insurance and contents insurance.
- Homeowners should consider buildings insurance (if the property is mortgaged it is often a condition of the mortgage) as it is designed to cover the cost of damage to the structure of your property.
- Contents insurance is designed to cover the cost of loss or damage to your personal belongings inside the property and should therefore be considered by homeowners, renters and students alike.
- Once you have decided on the type of home insurance policy you need, you can easily compare the cost of different providers via a comparison site.
- We have partnered with Quotezone* so that you can search and compare quotes from over 40 UK home insurance providers.
What is home insurance?
Home insurance is an insurance policy designed to cover costs if your property or the possessions inside are damaged, lost or stolen. Home insurance is usually split into two types of cover which means you can get insurance for both the structure of your property (Buildings insurance) as well as the contents inside the property (Contents insurance). These policies can either be bought separately or as a combined policy.
What are the different types of home insurance?
The two main types of home insurance policy are:
- Buildings insurance – Buildings insurance typically insures the structure of your home and anything that is permanently fitted e.g. a bathroom suite or kitchen units. Buildings insurance can also protect your property against damage caused by burst pipes, storms, floods and fire.
- Contents insurance – Contents insurance usually covers the possessions inside your home such as electronic appliances and kitchen appliances. Contents insurance can cover your personal items in the event of damage, loss or if they are stolen.
For more information on home insurance and how it works, read our article, ‘What is home insurance?‘
Do I need home insurance?
Home insurance is not a mandatory requirement in the UK but it is usually a good idea to ensure your home is suitably insured in case of any damage that may occur either to the exterior of the property or the contents inside. While not a legal requirement, buildings insurance is typically required as a condition set by your mortgage provider and you may be asked to provide proof of purchase before your mortgage can exchange and complete. Contents insurance is a good idea if you want to protect your belongings against damage or being lost or stolen and some policies may even cover your possessions when you are outside of your home.
Home insurance does not usually cover general property maintenance or wear and tear and there may be restrictions on cover if you are away for long periods of time.
Do I need home insurance if I have a mortgage?
When purchasing a property, most mortgage providers will insist you have buildings insurance as a condition of the mortgage and it is essential that this is in place before you exchange contracts. Buildings insurance protects you, and the lender, against the cost of rebuilding the property if it gets damaged or destroyed.
When taking out a buildings insurance policy you need to ensure that you have the right amount of cover for your home as the amount you are insuring is the maximum amount that will be paid in the event of a claim. The amount that you need to insure is the cost of rebuilding the property and not the amount that you bought the property for or its existing value. The Association of British Insurers (ABI) has a handy property rebuild cost calculator to help you estimate this cost.
If you have a mortgage it is up to you whether you have contents insurance. Home contents insurance is worth considering if you feel that you would not be able to replace all of your belongings should they get destroyed, lost or stolen.
Do I need home insurance if I own my property outright?
If you own your property outright you should consider taking out home insurance in order to protect your property and belongings. Buildings insurance covers the cost of rebuilding your property should it get destroyed so is worth taking it out to protect your home against unexpected events such as fire or a flood. Additionally, it may be worth taking out contents insurance as it will insure the contents of your home if they too are destroyed or are lost or stolen.
Do I need home insurance if I have a leasehold property?
If you are living in a leasehold property it is likely that the freeholder has arranged the building's insurance for the property and you may be paying for this within your service charge. Always check with the leaseholder, as it may be something that you need to arrange yourself. If your home was destroyed in a fire, would you be able to cover the cost of replacing the destroyed items? If the answer is no, it may be worth considering contents insurance for your property.
Do I need home insurance if I am a landlord?
If you are a landlord of a property then you are responsible for insuring the building with a home insurance policy. If you have a buy-to-let mortgage your mortgage provider is likely to insist you have buildings cover. If there is no mortgage on the property you may wish to purchase buildings insurance to cover the cost of damage to the property that could be caused by storms, floods or fire. As the landlord of the property, it is your responsibility to repair any damage caused to the building.
It is possible to get landlord insurance which is specifically designed to insure rental properties. Landlord insurance may offer you more protection than a standard home insurance policy and there may be the opportunity to enhance your cover for protection against accidental damage caused by tenants, emergency call-outs and labour and legal expense cover.
Additionally, if the home you are renting out is fully furnished, you may wish to consider contents insurance to insure any belongings in the home such as furniture or kitchen appliances.
Do I need home insurance if I rent?
If you rent your property privately it is usually up to the landlord to get buildings insurance to insure the building. You may however wish to take out contents insurance to ensure your personal belongings are protected in the event they are lost, damaged or stolen. You may also be able to get contents cover that ensures your valuables are protected outside of the home.
Do I need home insurance if I am a student?
If you are a student you may wish to consider purchasing a contents insurance policy to protect your personal belongings in your home. As it is likely that you rent your student accommodation, you may not need to purchase a buildings insurance policy as this should be covered by your landlord, however, it is always best to double-check. In some cases, you may be covered on your parent's home contents insurance policy but if not, it may be worth seeing if you can get student cover added as this could be cheaper than a separate policy.
How much home insurance do I need?
When taking out home insurance you need to make sure you have the right amount of cover. Buildings insurance is designed to cover the cost to rebuild your home – not the property's existing value – so you need to check the level of cover you are insuring yourself for so that you are not paying more than you need to. If you are not sure how much it will cost to rebuild your property, use the ABI's property rebuild cost calculator to help estimate this cost. Some policies may be able to offer unlimited cover for rebuild costs but this will be reflected in the price of the policy you take out and you could therefore get a policy cheaper elsewhere.
When looking at contents cover you need to work out the value of the personal possessions in your home and the cost to replace them if they are damaged or lost or stolen. If you find yourself underinsured you could be out of pocket if you need to make a claim.
You should regularly review your home insurance policies as the cost to rebuild your home can change over time, particularly if you have made home improvements with extensions or loft conversions.
Do I need any optional extras on my home insurance policy?
With a home insurance policy, you may have the option to purchase additional extras to further enhance your cover. The extras available will depend on the insurer but can include:
- Legal cover – cover for any legal costs that may be associated with your claim e.g compensation for an accident where you were not at fault
- Home emergency cover – cover for labour and call-out costs due to an emergency e.g being locked out of your home or your boiler has broken down
- Accidental damage – you may be able to add on extra cover for accidental damage in your home such as broken glass or drilling through a pipe
- Personal possessions – some insurers offer personal possession cover for outside your home for items that you carry with you e.g jewellery or a laptop
How to buy home insurance
One of the easiest ways to compare and purchase a home insurance policy is via a comparison site. We have partnered with Quotezone* to allow you to search and compare cheap quotes from over 40 UK home insurance providers.
One thing to consider, however, is that not all comparison sites are whole of market so you may be able to get a better deal directly through an insurer that isn't listed on a comparison site. We share ways to ‘save money on your home insurance‘ in our article.
When shopping around for the best home insurance policy you should also consider the following:
- Policy excess – This is the amount payable when making a claim. Usually, the higher the policy excess, the lower your insurance premium but as it is the amount payable if you claim, you need to ensure it is affordable.
- Are you over or underinsured? – Have you worked out how much it costs to rebuild your property or to replace the contents inside your home? Not doing so could mean you are underinsuring yourself in the event of a claim. Alternatively, you may be paying more for your premium as you have insured your property for more than it would cost to rebuild.
- Do you need any optional policy extras? – Could you benefit from any policy extras offered by the insurer? You may want to consider legal or accidental damage cover for example and so you should check to see how much it will add to your premium.
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