In this article we explain what home insurance is and the different types of home insurance you can buy. We explain what is and isn't covered as part of a standard home insurance policy, including the optional extra's you can take out. We also provide guidance on who needs home insurance and which policy is best.
What are the different types of home insurance?
Home insurance is the general term used when describing insurance policies that protect your home, however, there are two types of home insurance policy and it is important to understand the difference between the two. Buildings insurance is a home insurance policy that covers damage to the structure of your property. Contents insurance is a home insurance policy that protects your possessions in the event that they are stolen, damaged or destroyed. Most people purchase a combined buildings and contents insurance policy, however, they can be purchased separately. We explain both buildings and contents insurance in more detail below.
Most home insurance policies carry a caveat that means that you are unable to claim if your property has been left unoccupied for a specified period of time, usually 30 days or more. If you are intending on leaving your property unoccupied for longer than 30 days then you should look at a specific policy that protects unoccupied properties.
Buildings insurance explained
In most cases, buildings insurance will be required in order to secure a mortgage on a property. It provides the lender with the assurance that the cost for any damage or repairs to the structure of your property can be met. It will usually cover you for damage to the structure of your property caused by theft, fire, storms, subsidence, flooding and other types of water damage. It should also protect your property - including fixtures and fittings - against damage caused by explosions or earthquakes.
Buildings insurance - What is included?
Buildings insurance policies vary from insurer to insurer and so you should always double-check the policy details, however, most policies will protect against damage to the property for the following:
Damage to your property caused by fire
Damage to your property caused by smoke
Damage to your property caused by vandalism
Damage to your property caused by frozen or burst pipes
Damage to your property caused by storms
Damage to your property caused by an explosion
Damage to your property caused by flooding
Damage to your property caused by leaks
Damage to your property caused by subsidence
Damage to your property caused by collisions (from vehicles etc)
Buildings insurance - What is not included?
Buildings insurance policies will not usually cover you for the following:
Damage to your property caused by pests (birds, rodents etc)
Damage to your property caused by leaking roof/gutters
Damage to your fences/gates caused by storms
Possessions that are stolen, damaged or destroyed
Contents insurance explained
Contents insurance is a home insurance policy that covers your personal possessions in the event that they are stolen, damaged or destroyed. Most homeowners would choose to have both buildings and contents insurance to ensure that both the property and the possessions within the property are covered. It is important to understand what the true cost of replacing your personal belongings would be as this will dictate how much the policy will cost as well as how much will pay out in the event of a claim.
Contents insurance - What is included?
Contents insurance policies vary from insurer to insurer, however, most contents insurance policies would protect your possessions and belongings for the following:
Damage to your possessions caused by fire
Damage to your possessions caused by smoke
Damage to your possessions caused by vandalism
Damage to your possessions caused by storms
Damage to your possessions caused by an explosion
Damage to your possessions caused by flooding
Damage to your possessions caused by leaks
Damage to your possessions caused by subsidence
Theft of your possessions
Contents insurance - What is not included?
Contents insurance policies will not usually cover you for the following:
Damage to your property
Damage as a result of general wear and tear
Mechanical or electrical failure of possessions including fridge, TV etc
Accidental damage to possessions (may be an optional extra with some insurers)
Home insurance - Optional extras
You have the option to bolster your home insurance policy with a number of optional extras and we explain some of the most popular policy add-ons below:
Some home insurance policies provide legal expenses cover as standard, although others may charge extra. Legal expenses cover - often referred to as family legal protection - protects you against the cost of being sued or alternatively, can cover the costs of making a claim against someone else.
Emergency cover - sometimes referred to as home emergency assistance - pays towards the cost of an emergency repair, such as a broken boiler. Some policies also pay towards the cost of emergency accommodation if you are required to immediately vacate your property. This type of cover can be bought separately and so it is worth shopping around.
This type of cover provides insurance for damage to or theft of items away from your family home. This could help pay towards the repair or replacement of items that you regularly take out of your home such as a laptop or bicycle.
Accidental damage cover
Accidental damage cover can be added to your policy and it may cover you for accidental damage such as damaged flooring or ruined carpets.
Do you need to buy home insurance?
Buildings and contents home insurance is a sensible choice for most people, however, there are times when having certain types of home insurance isn't necessary. We explain more about who needs what type of home insurance in the section below.
What home insurance do you need if you are a mortgage holder?
As a mortgage holder, you should consider having both buildings and contents home insurance in place. In fact, most mortgage providers will add a condition that insists you have buildings insurance in place before the funds are released.
What home insurance do you need if you own a property outright?
Even if you own your property outright and you own the freehold, it is still sensible to have buildings and contents insurance in place as it will pay towards the cost of any damage to the property and contents and ensures that you don't have to foot the bill. If, however, you are a leaseholder, then it is generally the responsibility of the freeholder for purchasing buildings insurance and so you may only want to consider contents insurance.
What home insurance do you need if you are a tenant?
Tenants do not need to buy buildings insurance as it is the responsibility of the landlord to protect the structure of the property. It would be wise for tenants to consider contents insurance, especially as rental properties can be more vulnerable to theft, as accommodation is often shared. It is worth paying particular attention to any optional extras that are available on the policy such as accidental damage cover as this would help pay towards any accidental damage to carpets or flooring. Tenants should be aware that whilst the landlord would typically insure the property they may still have recourse to the tenant for any damage they have caused to the structure of the property.
What home insurance do you need if you are a landlord?
It is the responsibility of the landlord to insure the building and so buildings insurance would be necessary in most cases. If a property is being let as furnished, then contents insurance would also be wise. Additionally, specialist insurers may offer a 'buy-to-let' or 'landlord' insurance which is tailored to meet the specific needs of a landlord and usually includes liability insurance in the event that someone is injured in the property.
What home insurance do you need if you are a student?
Student's renting from a landlord do not need to purchase buildings insurance. A contents insurance policy would cover possessions against vandalism, theft, fire and floods and so is a wise choice for most students. Parents may want to take a look at their own home contents insurance policy as there may be an option to add 'student cover' to the policy. In some cases, the cost of adding the cover can be more than buying the cover separately and so it is worth shopping around.
Home insurance isn't a legal requirement, unlike other insurance policies such as car insurance. Home insurance is broken down into two types; buildings insurance and contents insurance and not everyone needs both. Buildings insurance is often mandatory when applying for a mortgage as it provides assurance that the costs of repair to a property can be met. Damage to property can run into the thousands and so buildings and contents home insurance provides a cost-effective way of ensuring that your property - and the contents within it - are protected.