Guide to Home Insurance
Guide to Home Insurance Home insurance provides essential financial protection to everyone, whether they are a tenant living in a small flat or the proud owner of a seven-bedroom mansion, as it will pay out when the unexpected happens and provide that peace of mind that your investment is protected. There are two main types of home insurance: buildings and contents cover, but sometimes they are sold together as a combined policy. In this guide, we explain the different types of insurance, and who needs them. Home Buildings Insurance What is Buildings Insurance? As the name suggests, buildings insurance covers the actual building, rather than the belongings inside it. This means the structure of the home, including the roof, walls, windows, and other permanent fixtures, such as a fitted kitchen or bathroom. Why you need Buildings Insurance Buildings insurance is not compulsory for homeowners, but it is recommended, due to the potential high cost of repairs or rebuilding. Most mortgage providers will insist on the owner having cover. Tenants do not need buildings insurance as this is the landlord s responsibility, as the landlord will own the building. What does Buildings Insurance cover? All good buildings insurance policies will provide protection in the event of fire, theft, subsidence, burst pipes and damage caused by bad weather such as storms, flooding, and fallen trees. There are additional cover options, such as accidental damage and legal expenses that often prove to be a good investment. Buildings Insurance exclusions Buildings insurance won t pay out for wear and tear, or acts of war or terrorism, and it s important to check whether there is a clause about the property being unoccupied, as if it s left vacant for longer than 30 days, the policy could be void. Home emergency cover can provide extra peace of mind and is highly recommended, as it covers things that most buildings insurance does not. However, before taking on an additional policy, you should check whether you are already covered. 1
How much Buildings Cover is needed? All buildings insurance policies should provide enough to cover the cost of rebuilding the property. The rebuild cost is usually lower than the sale price or market value, but if recently bought, it should be based on the value of the mortgage. Home Contents Insurance What is Home Contents Insurance? Contents insurance covers everything that is inside the home and your personal belongings; essentially, everything that you would take with you if you were moving home, such as furniture and kitchen appliances, while buildings insurance covers the rest. Who needs Home Contents Insurance? Homeowners need contents insurance as well as buildings insurance and in most cases a combined policy is the most effective option. However, students and tenants will also need contents insurance to protect their personal effects, as the landlord does not have responsibility for this. What does Home Contents Insurance cover? Contents insurance covers everything inside the home, including carpets, curtains, furniture, kitchen appliances, clothes, gadgets, and just about anything else. Choose between 'new for old' and indemnity cover; the latter takes wear and tear into consideration, while the former pays out the cost of buying new replacements. Like buildings insurance, it will pay out in the event of fire, theft, and flooding. Home Contents Insurance exclusions There is likely to be a limit on the pay out for a single item. In most cases it is best to insure high-value items separately to avoid ending up out of pocket. Accidental damage is usually excluded as standard, but with the option of adding on as an extra. How much Home Contents Insurance is required? The vast majority of people underestimate the value of their contents by thousands of pounds. On average, household goods and personal belongings can add up 55,000, so it is worth paying out for cover. 2
Second Home Insurance What is Second Home Insurance? Second home or holiday home insurance provides cover for properties that are unoccupied for more than 30 days at a time. The policy can either include both buildings and contents insurance, or just buildings insurance. Why Second Home Insurance is necessary? Anyone that owns a second property should have specialist second home insurance as it is just as at risk, if not at a higher risk as no one is there, as their main residence. What does Second Home Insurance cover? Second home insurance should provide the same cover as standard buildings and contents insurance, but also allow for the fact that the property could be left unoccupied for long periods of time. Most insurers also provide cover for properties outside the UK, but it s important to double check. Second Home Cover Exclusions Some insurers won t provide second home insurance for a static caravan, instead recommending specialist insurance. The following cover isn t usually included as standard, but could be an add-on: accidental damage, home emergency, loss of income, public liability insurance. Second Home Cover Requirements Just as with traditional home insurance, second home owners should take out enough insurance to cover the cost of rebuilding the property and any outdoor features, such as swimming pools or garages, and replacing all their contents. Listed Building Insurance What is Listed Buildings Insurance? Some buildings in the UK are considered to be of architectural or historical interest and so are listed in one of these categories. As such, in the event they are damaged, the property has to be restored as near to the original as possible, requiring specialist insurance. Who needs Listed Buildings Insurance? Listed building insurance is not compulsory for owners of listed buildings, but it is recommended, as standard home insurance is unlikely to provide adequate cover. 3
What does Listed Buildings Insurance cover? Just like traditional buildings insurance, it will provide cover in the event of storms, flooding, subsidence, theft, vandalism and fire, but will allow for a much higher rebuild cost due to the need for particular techniques and materials. Listed Buildings Insurance exclusions Listed buildings insurance includes the usual exclusions such as acts of war or terror, illegal activities and any existing damage. How Much Listed Buildings cover is needed? It is almost impossible to estimate how much cover a listed building needs, so it is worth paying for an accredited surveyor to provide a specialist valuation. 4