Different types of home insurance policy.
So far in our home insurance guide we have examined the basics of buildings and contents insurance. There are however, a number of different levels of cover available and finding a policy that covers not just the full value of your property, but also the full value of its contents can be a little tricky.
Here in part four of the guide we will look at the different levels of cover and how to make sure your home and its possessions are fully insured.
Buildings insurance - types of cover
When it comes to buildings insurance the most important factor is covering the full rebuilding cost of the property rather than its market value.
In the current economic climate property values are unstable therefore it could well be that the market value is a lot less than the amount it would cost to fully rebuild the property from scratch. The difference could be in the tens of thousands which would be left up to you to fund.
Another example would be in the case of two identical houses in two slightly different areas. They would have exactly the same rebuilding cost but the market value of one of the properties may be a lot lower because of its location.
This is why it is essential to insure the full rebuilding cost of your property rather than the market value. It will give you peace of mind that should your home be destroyed due to storm/flood damage, an explosion or fire, your home can be rebuilt without you have to fund any shortcomings.
To evaluate the full rebuilding costs of your property, follow the advice in our home insurance calculator section.
Contents insurance - types of cover
One thing to remember when it comes to contents insurance is to avoid under-insuring your possessions. Using our contents calculator you will be able to add up the value of your items room by room making it much less likely that you will miss anything out.
When applying for a policy, you will usually be asked to define a 'sum insured'. This is the maximum amount that the insurer will pay out in the event of a claim. Under-insuring could have drastic consequences even when only claiming on one or two items. For example, if the total value of your contents is £20,000 yet you only insure them for £10,000 then you will effectively half the value of your contents, so in the case of claiming on a £2000 carpet your insurer would only pay out £1000.
Make sure you add everything of both value and sentimental value. This could include anything you have made or any item that has been given to you as these will all need to be replaced in the event of a disaster.
Try to add the dates that the items were purchased or received and where possible any receipts you may have for the items. Whilst this can be a lengthy process it will be well worth it in the end.
Your insurer may place limits to how much a single item or collection of items can be insured for. Take note of these limits as for expensive items such as antiques you may need to purchase additional cover or insure the item with a specialist insurer. For expensive items that are made up of separate components such as a camera made up of the body, lens and other peripheral equipment, you could insure each component individually therefore not exceeding the single item limit.
Contents insurance - variable options
Whilst it is possible using our comparison tool to find the cheapest contents insurance policy there are additional extras you may want to think about adding. Yes they may increase the cost but if the additional cover is important to you, then paying a bit more now, may save you a lot more in the future.
Here is a list of the variable extras you could add on to your policy:
- 'New for Old' policy - This will replace any lost or damaged item with a new version at today's prices.
- Legal cover - This will cover court costs and solicitor fees. Legal cover can help you with compensation claims for injury, consumer disputes from buying, holding or selling goods and disputes with neighbours such as issues with a new fence or a tree blocking light for example.
- Freezer contents cover - If your fridge or freezer were to fail and its contents became inedible your insurer could pay out a fixed amount to cover the loss.
- Sports equipment cover - Golf clubs, winter sports equipment, mountain and racing bikes and more can all be covered whilst in the home and protect them from theft or damage. This will not however cover the equipment whilst it is in use.
- Garden cover - This will protect items such as patio sets, garden tools, the contents of your shed and even your garden plants. Essential whether you are a serious gardener or and amateur.
- Accidental damage - This will cover damage that is caused by DIY accidents or paint spillages. It can be included as both part of your buildings and/or contents insurance policy.
- Third party liability - If a guest or visitor were to become injured as a result of a defect with your property and took you to court, this will any pay outs that are made in compensation.
Buildings and contents insurance combined
You could receive a discount from your insurer if you take both buildings and contents insurance with them. However, be ensure you read the terms and conditions for both insurance types as while the insurer may be good for buildings cover they may not be as good for contents cover and vice-versa.
In part five we will cover insurance for landlord, tenants and those homeowners who live in flood risk areas.