Tips for buying the right home insurance

Everybody needs house insurance, whether you’re a homeowner or a tenant or whether you’re mortgaged to the hilt or an outright owner. Protecting your building and the stuff inside it should be everyone’s priority, so let’s take a closer look at the different types of house insurance and help you decide what type is right for you.

Buildings insurance

This type of cover insures the building itself. This includes the basic structure of the property – the walls, floors and ceilings – as well as attached fixtures, including built-in wardrobes, kitchen and bathroom suites, pipes and drains. If you have a garden shed or outbuilding, they may also be covered under buildings insurance.

Tenancies are usually covered under the landlord’s buildings insurance, so you won’t need to take out buildings insurance yourself if you’re renting.

If you're the property owner, though, buildings insurance is an absolute must. Don't be tempted to skip it to save a few pennies in the short term. If you do and your property is damaged in any way, you'll be on the hook for every penny of the rebuild or repairs if you're not covered – which can run into hundreds of thousands of pounds.

Contents insurance

This covers the things inside your home – your possessions. This includes anything from clothes and décor to musical instruments. Tools, bikes and jewellery are also generally covered, but be careful, as certain high-value items are commonly excluded from standard policies.

If you’re renting, you should take out tenant’s insurance to protect your stuff, as only the things your landlord owns will be covered by their policy.

Add-ons

Depending on how you use your home, you may require add-ons and extras. For example, if you run a business from your home and hold stock on your property, you may need business insurance in case it gets stolen or damaged. Similarly, if you see clients at home for a small business, like massage or beauty therapy, you should consider public liability insurance in case a client has an accident on your premises.

If you work from home, pricey equipment (such as monitors, headsets and anything that isn't covered by your employer's business insurance) is usually covered through your contents insurance. Still, it might be worth a check with your insurer if you need more clarification.

Is house insurance a legal requirement?

In the UK, it's not a legal requirement to have house insurance in place. However, most mortgage lenders will require you to have buildings insurance sorted before you move in and will only let your solicitor complete the purchase once this box has been ticked. This is because they technically own most of your house until the mortgage is paid off in full – so they have a vested interest in protecting it.

Unlike building insurance, your mortgage lender won’t require you to have contents insurance in place before releasing funds to you. This is simply because your mortgage lender doesn’t own your possessions the way they do your house until it’s paid off, so it doesn’t care so much what happens to them.

Tips for buying the right house insurance

• Read the fine print

Not all insurance policies are created equal – so read your policy carefully. It's helpful to know how broad the criteria are for claims – for example, the definition of a storm might differ from insurer to insurer.

• Combine your cover

If you’re a homeowner, you can combine your house insurance requirements and get both buildings and contents cover together, which usually results in paying less overall.

• What’s the excess?

Most policies require you to pay an excess when you claim for certain items. This is made up of compulsory excess – a fixed amount you must pay to make the claim – and voluntary excess, which you can choose to pay on top of each claim to get cheaper cover overall.

Excess charges should be made clear upfront when you take out your policy.

• Consider accidental damage

Accidental damage is usually sold as an add-on to a regular home insurance policy. It covers things like broken windows, DIY fails and even spilt red wine. It’s definitely worth getting this cover if you’re clumsy – but before you set up that indoor trampoline, check the exclusions carefully.

• Check maximum claim amounts

Look for policies which allow you to claim what your items are actually worth. If you have a budget TV and hi-fi system, for example, you won’t mind if the maximum claim amount for each item is £200.

• Watch out for exclusions

Contents insurance may not cover high-value items you keep in your home, for example. If you have a very expensive TV, speaker system or jewellery items, it’s unlikely they will be covered on a regular contents insurance plan.

• Will my stuff be replaced like-for-like?

Some policies will replace your stolen or damaged items with something brand new, like-for-like. These are known as ‘new-for-old’ policies. The other main type of indemnity cover, which takes into account wear and tear, so will only cover an item up to its realistic second-hand value.

The new-for-old cover is most people’s preference as it means you get a higher value replacement, although the premiums are cheaper with indemnity cover.

• Cover the worst-case scenario

If you’re a homeowner taking out buildings insurance, make sure it covers the full cost of rebuilding your home. In the unlikely event your house is damaged beyond repair, you’ll need insurance to cover everything from site clearance to designing a new building to stand in its place.

• Make sure it covers all eventualities

Before taking a policy out, check it to make sure it covers as many different eventualities as possible. A robust house insurance policy should cover the following:

• Damage caused by fires, floods, explosions, storms or earthquakes
• Objects falling onto your home, such as lampposts or trees
• Theft and vandalism
• Shifting foundations (subsidence)
• Burst pipes and water leaks

• Don’t think, “it won’t happen to me”

Insurance agents spend all day reviewing claims from policyholders just like you, who have one less thing to worry about, knowing the costs of damage, repair or replacement are covered.