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Everything you need to know about your home insurance
A plain guide to home insurance: buildings and contents cover, combined policies, cover for landlords and tenants, and ways that may reduce the cost.
Whether you live in a one-bedroom flat in the city or a four-bedroom semi in the suburbs, it makes sense to have the right protection in place for when the unexpected happens. That might be damage to your home from a fire or a storm, or having your belongings stolen. Home insurance is there to cover events like these.
As well as protecting your home and possessions, home insurance matters if you have a mortgage. Lenders usually require you to insure the building for its full rebuild value, and may not lend without it.
Here is a walk through the main things to know about home insurance.
What is home insurance?
Home insurance is a type of insurance that protects your property and your possessions.
If you own your home outright, there is no legal requirement to have home insurance. Still, many homeowners take out a policy so they know they are covered if something happens to their property.
What is buildings insurance?
Buildings insurance helps cover the cost of repairing damage to the structure of your home, up to the cost of rebuilding it from the ground up. If the walls, windows or roof are damaged, or fixtures and fittings such as baths, toilets or kitchens, buildings insurance helps cover the cost of the repairs.
Depending on the policy, you may also be covered for structures around your home such as garages, fences and driveways. Each provider is different, so it is worth checking.
What does buildings insurance cover?
Generally speaking, you can claim if your home is damaged by:
- vandalism
- subsidence
- falling trees
- fire, smoke or explosions
- vehicle collisions
- water damage
- natural events such as storms and floods
What doesn't buildings insurance cover?
You typically won't be covered for general wear and tear. Each policy has its own exclusions, and you won't be able to claim for them. Exclusions often include damage caused by:
- leaking gutters
- pests such as insects and birds
- frost, unless it causes damage through a burst pipe
Exclusions vary between providers, so it is worth reading your policy carefully.
Are there different types of buildings insurance?
Yes, and it is important to have the right type. The two main types are sum insured and bedroom rated.
Sum insured. You work out the cost of rebuilding your home, and that figure is the sum insured. The rebuild cost is not the same as your home's market value, and it can be higher or lower. Some people ask a chartered surveyor to estimate it. As building costs change over time, it is worth reviewing the figure every few years so the details on your policy stay accurate.
Bedroom rated. The insurer estimates the cost of rebuilding your home based on the number of bedrooms, and sets a sum insured designed to protect you against under-insurance.
The choice often comes down to cost against convenience. A sum insured figure can be tricky to calculate and easy to get wrong, but it means you pay for the cover you need. A bedroom rated policy is simpler, but you may end up paying for more cover than you need.
What is contents insurance?
Contents insurance helps cover the cost of replacing your possessions if they are stolen, damaged or destroyed. As a rule of thumb, your contents are the things you would take with you if you moved house. If you claim, the insurer will settle on either a new for old or an indemnity basis.
New for old means the insurer pays for a brand new item of equivalent value. Indemnity means the insurer takes wear and tear into account, which reduces the payout.
What does contents insurance cover?
Your personal belongings, or anything not physically attached to the property, such as:
- clothes
- furniture
- jewellery
- electrical goods
Accidental damage to your own belongings is often limited under a standard policy and is usually available as an add-on.
You can also often add personal possessions cover, which protects items you take outside the home, such as:
- laptops
- cameras
- jewellery
- mobile phones
What doesn't contents insurance cover?
There will always be some items or situations that aren't covered, and it depends on the policy. Exclusions can include:
- wear and tear
- structures such as walls and the roof, which are covered by buildings insurance
- damage to your computer caused by a virus
Your mortgage lender won't usually insist on contents insurance in the way it does buildings insurance, but many people take it out in case the unexpected happens to their belongings. Your policy will have an excess, which is the amount you pay towards each claim.
What is combined insurance?
Running two separate policies for your buildings and your possessions means more paperwork. Many insurers offer combined policies, which protect both the property and your belongings under one policy.
Do I need home insurance if I'm a landlord?
If you have a buy to let mortgage, your lender will usually insist on buildings insurance. A standard home insurance policy often won't give the right cover for a let property, so landlords usually look at a landlord policy instead.
If you own the building outright, you aren't legally required to have buildings insurance, but without it you would be liable for the full cost of any repairs. If you let a furnished property, you may also want contents cover for the items you provide, such as washing machines and fridges.
I'm renting. Do I still need home insurance?
If you rent privately, your landlord is responsible for insuring the building. It is worth speaking to your landlord to understand what is and isn't covered.
Your landlord's insurance won't cover your own belongings, so many tenants take out their own contents insurance.
Ways that may reduce the cost of home insurance
Whether you have a combined policy or separate ones, these are some of the things that can affect what you pay.
Paying annually. Paying in one lump sum costs more up front, but paying monthly can include interest or a credit charge, which can make it more expensive over 12 months.
Improving your home security. Better security can make you less of a risk in an insurer's eyes. Examples include secure locks on doors and windows, or a burglar alarm.
Increasing your excess. Your insurer sets a compulsory excess, which is the fixed amount you pay towards any claim. Choosing to pay a higher voluntary excess can reduce your premium, but make sure you could afford to pay it if you needed to claim.
Building up a no claims discount. If you go a period of time without claiming, your insurer may offer a no claims discount on your premium.
Where can I get a home insurance quote?
If you are buying a home for the first time, or your renewal is coming up, you can find out more on our home insurance page. You fill in a short form and a specialist broker from our panel contacts you about cover.