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Consumer Intelligence Feb 2014

All you need to know about home insurance

It doesn't matter whether you live in a one-bedroom flat or a five-bedroom detached house, your home is no doubt your castle. So it's important to make sure that you have the right protection in place in case something should go wrong.

What if there was a fire or the roof was damaged in a storm? Would you be able to pay for the repairs? And where would you live if your house was uninhabitable? Your home also contains some of your most valuable possessions. Could you afford to replace your flat screen TV or your jewellery collection if you were the target of burglars?

Your home contains some of your most valuable possessions
Your home contains some of your most valuable possessions

What does buildings insurance cover?

There are two types of house insurance: buildings and contents cover. Buildings insurance covers the structure of your home, so the roof, walls and windows. It also includes the permanent fixtures, such as the fitted kitchen and the bathroom suite. Buildings insurance policies vary, but they should all insure your home in case of fire, storm, flood, subsidence, burst pipes, theft and falling trees.

Most insurers offer extra cover if you need it, though you will normally have to pay an additional premium. Accidental damage is one of the most popular policy add-ons. You might also want to consider legal expenses cover.

Common exclusions

Buildings insurance will not normally pay out for damage due to wear and tear, or acts of war or terrorism. If your home is unoccupied for more than 30 days during the year, you could also invalidate the policy. Always read the small print before you buy buildings insurance to make sure you have the right cover for your needs.

Is buildings insurance compulsory?

It is not compulsory to take out buildings cover, but if you have a mortgage on your property the lender will almost always insist that you have adequate insurance. If you are in the process of buying a home, you should make sure you have buildings cover in place when you exchange contracts, as you then have a financial interest in the property.

Tenants do not need to worry about buildings insurance as it is the landlord's responsibility.

How much buildings insurance do I need?

You should have enough insurance to cover the rebuild cost of your home. In other words, if your property burnt to the ground, the insurance should pay for it to be rebuilt. But remember that the rebuild cost is not the same as the sale price or the current market value of your home. In fact, it is often lower.

If you have just bought your home, the rebuild cost should be on the mortgage valuation. Otherwise, many insurers offer free online calculators. Or, you could visit the website of the Association of British Insurers, which has lots of useful information, including a calculator.

It is important to work out an accurate rebuild cost. If the sum insured is too high, you could end up paying over the odds for cover you don't need. If it is too low, you could be left with an insurance shortfall - and a big bill.

Some firms offer so called unlimited cover, which means they will pay out, whatever the cost. It sounds great, but bear in mind that it might work out more expensive. The insurer might also calculate a sum insured based on the type of property, the number of bedrooms and the area. Again, it's often a good idea to check the accuracy of the figure yourself.

Experts recommend that you regularly review the rebuild cost of your home to make sure the figure is up-to-date as prices inevitably change over time. You might also renovate or extend your home, which would also affect the rebuild cost.

If you live in an unusual or listed property, the rebuild costs can be more difficult to calculate and you might need to seek professional help from a surveyor.

Counting the cost of contents

You don't just need to insure the structure of your home; you also need to insure its contents against loss or damage caused by theft, fire, storms, lightning, flooding or other water leakage, as well as explosions or earthquakes.

The contents of your home might be more valuable than you think. The average family of four estimates their contents to be worth £25,000. However, their true value is actually closer to £55,000. And it's important to get the figure right so that your insurance will pay out in the event of a claim.

The best way to make sure you have adequate cover is to walk round your house room by room and make an inventory of your possessions. Jewellery, computers, iPods - they can all add up to quite a sum. And don't forget the contents of your shed. Contents also include clothes, furniture, carpets and curtains. If you are unsure, it might help if you think of the things you would take with you if you were to move house.

Make sure you read the terms and conditions of the policy because most insurers limit the pay out for a single item. For example, if the single item limit is £1,500 and a ring worth £2,000 is stolen from your home, you could end up with a £500 shortfall.

Your insurer will probably ask for details of any valuable items, and it is important that you give all the relevant information. If not, you could invalidate the policy and the insurer could refuse to pay out in the event of a claim.

New for old

Contents insurance is usually arranged on a new for old basis. In other words, if your TV is damaged by fire, the policy will pay out for a new one. However, some insurers offer indemnity policies that take into account wear and tear. So, if your TV is 10 years old, it will only pay out its current value, not it's price when it was new. Indemnity policies tend to be cheaper, but most people prefer new for old cover.

You can buy additional contents cover - and in some cases it might be worth the extra premium. Accidental damage is a popular add-on because it insures your possessions in case of an accident, perhaps if you spill red wine on the carpet or knock over a valuable ornament. Personal possessions insurance can also be useful because it insures items such as mobile phones, iPods, cameras and laptops when you take them out of the home.

Contents insurance for tenants

Tenants don't need to worry about buildings insurance, but they should certainly consider tenants insurance for the contents of their rented home as they can amass quite a collection of valuable items. Some types of rented accommodation are also more vulnerable to theft, perhaps because of shared entrances, so it's especially important to have adequate cover in place.

It's often a good idea for tenants to extend their policy to include accidental damage, just in case they cause any damage to the landlord's carpets or curtains. However, bear in mind that some insurers will not cover your contents if you live in shared accommodation, or if you rent a furnished property.

What students need to know

Students often overlook contents cover - if you are going away to university, insurance is often the last thing on your mind. But students can be victims of crime, just like everyone else. Student contents insurance will also protect your belongings in case of fire, flood and vandalism - even burst pipes.

Some students choose to add their contents onto their parent's policy, which can be straightforward. But it can also work out more expensive than separate cover, so it pays to compare quotes.


Remember that you will need your own contents cover if you live in shared accommodation. Check also that the policy includes any bicycles or musical instruments and that you are insured during the holidays as well as term time.

The risk of flooding

Millions of properties are at risk of flooding, which means they might have trouble arranging home insurance. Flood insurance claims can be tricky to assess, not to mention expensive, so insurers are wary of flood prone homes.

The Association of British Insurers has struck a deal with the government to ensure that many homes that are prone to flooding are guaranteed cover, at least until June 2013. But you should expect to pay higher premiums for your home insurance if you live in a flood area. The excess for any flood claim could also be high, possibly running into thousands of pounds.

You can find out if your property is at risk by visiting the website of the Environment Agency at www.environment-agency.gov.uk.

There are a number of ways to protect your home from floods - in fact, your insurer might insist on some defensive measures as a condition of your cover. Flood boards, for example, can help to keep out the water in the event of a shallow or flash flood. It's also a good idea to move the boiler, plus any meters and electrical points, to well above the likely water level. You could also make sure that doors are concrete rather than wood.

Cracks in the walls

If you have spotted any large cracks in your walls, you could have a subsidence problem. Subsidence mainly affects homes in the south of England that are built on clay soil. Basically, if there is a long spell of dry weather, the soil shrinks and the property can start to sink into the ground.
Properties that are vulnerable to subsidence will almost certainly be more expensive to insure. You might also have to pay a high premium if you want to buy a house that has suffered from subsidence in the past, though you can usually ask the existing insurer to continue the cover. Find out more with our guide to subsidence insurance.

Insurance for unusual properties

Most homes in the UK have brick walls and a tile roof, but many properties are more unusual. If your house is not of a standard construction, you will probably need specialist home insurance because a mainstream insurer will most likely refuse cover. A range of property styles are defined as non-standard, including homes built with wattle and daub, houses with a timber frame and even properties with a flat roof.

Listed buildings

A listed building is judged to be of special architectural or historical interest - and there are 350,000 in England, usually built before 1840.

There are three grades of listing and most homes fall into the second category. You can find out more from the National Heritage List.

If your home is listed you have to seek special consent from the local authority if you want to alter the property in any way. For example, if you decide to install new windows or add a conservatory. You are also obliged to restore the building to its original state if it is damaged.


A standard home insurance policy might not be adequate for a listed property so listed building insurance is essential. The rebuild cost can be tricky to calculate, so you often need specialist help. Claims are also more complicated because you will almost certainly need specialist craftsman and materials.

A thatched roof over your head

You might dream of a cottage with a thatched roof but it can be a nightmare to insure. The big problem is the risk of fire. A thatched home is no more likely to catch alight than a standard property, but if a fire catches hold, it can spread rapidly and cause expensive damage. And if the house burns down, the rebuild costs can be high.

Thatched roof home insurance is an absolute must. It is also advisable to put in place some fire prevention measures, such as chimney lining and fire retardant coating.

Insurance protection for landlords

The responsibilities of a landlord are many and varied - and include insurance. Buildings insurance is vital to protect the structure of your investment property. You should also pay special attention to your contents cover, particularly if you let a furnished or partly furnished property.

A number of specialist insurers offer buy to let or landlord insurance and it normally includes liability insurance in case someone is injured on your property.

Landlords might also want to consider extending their cover to include rent guarantee insurance and legal expenses cover. The peace of mind is often worth the extra premium.

Insuring an empty home

If your home is left unoccupied for more than 30 days, it will not be covered under a standard policy. But what if you are moving to a new house but have not yet sold your existing property? Or maybe you have inherited a property but you are waiting for probate. There are lots of reasons why you might have to leave a home empty for a short period, but an empty property is not immune to risk.

Thieves and vandals often target unoccupied homes. There is also the danger of burst pipes if a house is left unattended. Unoccupied home insurance can cover all these risks, plus your liability if someone is injured on your property.

Down on the farm

If you run a farm, your house is not just your home, but also your business. You therefore need specialist cover. Farm insurance can be tailored to suit your individual requirements, whether you live on a small holding or a commercial dairy farm. But most policies will cover the farm buildings, including their contents.

You might also wish to include various other types of insurance, such as employers' liability and environmental liability, depending on the size of your farm and the nature of your business.

Home from home

Holiday homes are not usually occupied all year round and so need specialist cover. It's best to take out both buildings and contents insurance so that you know your bolt hole is fully protected. Holiday home insurance will also cover your home if and when it is let out to friends and family.

Insurance for self-build homes

Building your own home can be lots of fun, but it can also be risky. There are so many things that can go wrong, which is why insurance is essential. And not just any insurance. A standard home policy is unlikely to be adequate if you are building your home from scratch.

For example, you will probably need insurance to protect the construction site while the building work is in progress. Site insurance usually covers any tools, plant and machinery against loss or damage by theft, fire, flood or vandalism. Public liability insurance is worth considering in case a member of the public is injured on the site, as well as employers' liability insurance. Legal expenses cover could also be useful in case there are any disputes over planning permission.

Cutting the cost of cover

Home insurance premiums are on the way up. Buildings insurance typically costs £156.95 a year, a 9.5% jump on last year. Contents insurance has risen by 11.2% over the past year to a typical £80.58, according to the latest AA British Insurance Premium Index. The AA also expects premiums to continue their upward trend next year, with annual increases of between 5% and 10%.

But there are ways to cut the cost of home insurance. Remember, for example, that loyalty doesn't always pay and you can often save money if you shop around for cover. MoneySuperMarket's comparison service is quick and easy to use - and 51% of our customers could save up to £70 on their home insurance(Consumer Intelligence Feb 2014).

You might end up paying over the odds for your insurance if you take out too much cover. So it's important to calculate an accurate sum insured for both buildings and contents insurance. And don't buy too many extras unless they are absolutely necessary.

You can minimise the risk of theft by making your home secure - and the insurer might reward your efforts with a discount on your premiums. But always check with the company before you fit any locks or alarms to make sure they are approved.

Another way to earn a discount is to take out both buildings and contents cover with the same insurer. You might also be able to negotiate a lower premium if you agree to a higher voluntary excess. But the excess is the amount you have to pay towards any claim, so make sure the sum is affordable.

Selecting the right home insurance policy

MoneySupermarket wants to help you get the best quote for your home insurance. But we need to know something about your property before we can start the search. For example, roughly when it was built, whether you live close to any tall trees or water and the type of alarm and locks in your home. You will also need to give a sum insured for both buildings and contents. Both our home insurance calculator and contents calculator can help with this.

We can find competitive quotes for basic cover. But if you would like to add accidental damage and insurance for personal possessions, you simply click the relevant boxes.

Remember that you should always be full and frank with your answers. If you fail to disclose any relevant details to the insurer it could invalidate your policy. In other words, the insurer could refuse to pay out in the event of a claim.

Our comparison site is free and independent and will quickly come up with a list of quotes from a number of insurers. Price is an important factor when choosing the best policy, but it is not the only consideration. You should also look at the level of cover and the terms and conditions, paying particular attention to the excess.

So now it's over to you to start saving money today!