We explain why you need home insurance and what makes a good policy.
Home insurance provides you with financial protection in case of theft or damage to your property or possessions. Home insurance can be divided into two aspects, buildings insurance and contents insurance. A common analogy used to differentiate between the two is that if you turned a house upside-down, everything that fell out would need to be covered by contents insurance, whereas all the permanent fixtures that remained would be covered by buildings insurance.
Buildings insurance is an essential for homeowners because, as a means of securing their investment, the majority of mortgage lenders require a borrower to have sufficient buildings insurance in place to cover the rebuild (as opposed to market) value of their home. In addition to the property itself, outbuildings such as garages as well as permanent fixtures such as bathroom suites and fitted kitchens are usually covered under buildings insurance.
Contents insurance is required by both homeowners and renters alike as a means of protecting furniture, white goods, electrical appliances, clothes and other items kept in the home. The basic level of contents cover offered is called indemnity insurance, this is where an insured item is replaced with an item of the same age. Most people choose a higher level of insurance, known as new for old cover, which although slightly more costly, will pay for an insured item to be replaced with a brand new version if a claim is made.
Most insurance companies offer optional add-ons to home insurance policies which are ideal if a more comprehensive level of cover is needed. These add-ons include accidental damage cover, legal cover, emergency assistance and garden or sports equipment cover to name a few.
It is important to check that the level of cover you choose for your home insurance is sufficient to cover the rebuild of your home and the replacement of all of your possessions. It is also worth checking whether there are any limits placed on the amount that will be paid out for each item and also whether possessions are covered when they are taken outside the home.
Many insurance companies offer joint policy discounts if buildings and contents insurance are taken together. However, it is best to choose a home insurance policy for the level of cover it provides rather than the amount it costs. With a good home insurance policy in place whether you own your own home or rent a property you can be confident that if the unforeseen should happen, your possessions will be covered.
