Buying a property is likely to be one of the biggest purchases you will ever make and so it is advisable to make sure that you are suitably insured should anything happen to your property or belongings. In this article, we explain what home insurance is, how it works should you need to make a claim and the best way to buy a home insurance policy.
What is home insurance?
There are two main types of home insurance; buildings insurance and contents insurance. Both of these home insurance policies are designed to cover the financial cost of repair or replacement of your property or belongings due to fire or floods as well as instances of loss or theft. Buildings insurance is specifically designed to cover the structure of your property structure whereas contents insurance insures the personal items within the home. We explain more about the differences between the two types of home insurance policies in our article, 'What are the different types of home insurance?'
How does home insurance work?
Buildings insurance is designed to cover the financial costs to repair your home if the structure or the fixtures inside your property are ruined due to subsidence, fire or floods. Buildings insurance is generally taken out by homeowners and if you own a home with a mortgage it is usually a stipulation of the loan. If you rent a property or the property is leasehold, it is likely that the landlord or freeholder is responsible for the buildings insurance. Contents insurance will cover your personal possessions within the home if they are damaged or stolen and it can also cover some of your possessions outside of the home if you purchase an add-on to the policy. Contents insurance is a good idea for anyone that lives in a property, whether a renter or homeowner.
It can be hard to know how much home insurance you need, especially because the amount you are planning to insure will affect how much you pay for your home insurance premium. There are a number of calculators online that can help you to work out how much cover you need for your buildings or contents insurance policy. Also, remember that buildings insurance insures the cost to rebuild your home and is therefore not related to the property value. If you have had a recent property survey it is likely to detail the rebuild value, or you can use this handy tool by the Association of British Insurers (ABI).
Contents insurance will cover the cost to repair or replace the items inside your home. These are typically items that you would take with you if you moved house and so you need to ensure that your contents insurance policy is enough to cover the cost of all of those items. You will need to check your policy documents carefully though as some insurers may limit the value of certain items meaning you may have to pay for additional cover.
What is covered by home insurance?
The following table highlights what is and isn't usually covered by a standard home insurance policy. Optional extras such as legal cover and accidental damage can be added at an additional cost.
Always read your policy documents carefully to ensure you know exactly what you are covered for in the event of a claim.
What does home insurance cover?
|What is covered?||Buildings insurance||Contents insurance|
|Damage caused by smoke/fire|
|Damage caused by vandalism|
|Damage caused by frozen/burst pipes|
|Damage caused by storms|
|Damage caused by an explosion|
|Damage caused by flooding|
|Damage caused by leaks|
|Damage caused by subsidence|
|Damage caused by frozen/burst pipes|
|Damage caused by collisions (from vehicles)|
|Stolen, damaged or destroyed possessions|
|Damage to your property|
|Damage to your property caused by pests|
|Damage to your property caused by leaking roof/gutters|
|Damage as a result of wear and tear|
|Mechanical or electrical failure of possessions|
|Accidental damage to possessions||Optional with some policies|
How much does home insurance cost?
The cost of home insurance varies depending on numerous factors including your property type, the rebuild value of your home and where you live. Home insurance providers also consider other environmental risk factors and will look at the likelihood of you making a claim based on flood or subsidence risk.
According to the ABI, in the second quarter of 2022, the average annual price of a buildings insurance policy was £228 compared to £116 for a contents insurance policy. The average annual premium for a combined buildings and contents insurance policy was £299.
Making a claim on home insurance
If you need to make a claim on your home insurance policy you should contact your provider as soon as possible to notify them of the claim. If your property has been burgled you will also need to notify the police as it is likely you will be asked for a crime reference number when making a claim. If in an emergency you need to vacate your premises as it is not safe to stay, your buildings insurance provider should be able to arrange suitable accommodation and cover the costs until you can move back home.
In most cases, when making a claim your insurer will have a list of tradespeople that can be contacted in an emergency to repair your home but it may be possible to arrange for someone you trust to do the repair work if this is something that is pre-agreed with the insurer. If you need to make a claim on your policy it is advisable to keep any receipts so you can provide proof of purchase for any valuable items as it is likely you will be asked to provide these throughout the claims process.
When making a claim on your home insurance policy you will have to pay an excess amount towards the cost of the claim. The excess is usually pre-agreed when you take out the policy but can vary depending on what you are claiming for. Your home insurance policy excess should be stated in your policy documents and it is important that you check this carefully as this is the amount you will need to pay upfront when making a claim.
For more information on claiming on home insurance policies, read our article 'How to claim on home insurance'.
How to buy home insurance
You may be recommended a home insurance policy by your mortgage adviser when taking out a mortgage and while tempting, these may not be the best policies for your circumstances nor the best price. You should always try to shop around when taking out an insurance product so that you can compare prices amongst insurers and find the best deal.
One of the easiest ways to shop around is by using a comparison site as you can compare policies from multiple insurers at the same time. We have partnered with Quotezone* so that you can search and compare quotes from over 40 UK home insurance providers. It is worth noting, however, that not all insurers are featured on comparison sites and you could therefore get a better deal elsewhere or directly with the insurer.
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