Here are 10 things you need to know before buying home insurance.
1. There are two types of cover
When it comes to insurance, your home is divided into two parts: buildings and contents.
Buildings insurance covers the fabric of the building, as well as any permanent fixtures and built-in appliances. Contents insurance covers your belongings, including furniture, clothes and electrical items.
If you’re a homeowner, you should take out both types of cover – and some insurers offer discounted rates for combined buildings and contents policies. If you live in rented accommodation, the buildings insurance should be covered by your landlord.
2. What does buildings insurance cover?
Buildings insurance usually covers you against damage to your property from the following:
- Falling trees or branches
- Vandalism or malicious damage
- Impact from vehicles (including objects falling from aircraft)
3. What does contents insurance cover?
Contents insurance generally covers your belongings against:
- Fire damage
- Flood damage
- Earthquake damage
4. Try to be accurate with the amount of cover you need
When taking out buildings insurance, make sure that your home is covered for the rebuild value, not the market value. When you ask for a quote through MoneySuperMarket, we will use the information you provide to estimate the rebuild value.
The best way to calculate the value of your contents is to go from room to room and note down the value of each item, from clothes to computers to the contents of your fridge freezer.
Try to be as accurate as you can as undervaluing your contents will leave you underinsured, while over-estimating will unnecessarily increase the cost of your cover.
5. New for old is better
When taking out contents insurance, it’s better to get ‘new for old’ cover for your belongings as this means they will be replaced with a like-for-like new product, rather than the amount of money the old items were worth.
For example, if you claimed for a five-year-old 32-inch television, instead of just getting the amount you’d pay for a five-year-old TV set, you’d get a brand new 32-inch television.
6. You may need cover away from the home
If you have expensive items that you often use away from the home, such as a laptop or a pushbike, it may be worth having these items covered against theft or damage when being used somewhere other than your house or flat.
This is known as personal possessions cover and it will usually need to be added to your policy.
Also check to see if your insurance covers items such as the contents of your handbag or wallet, credit cards and luggage when travelling abroad and even items kept in your garden and shed.
7. Valuable items may need separate cover
If you own valuables such as jewellery, antiques, collections or high-spec electrical items, these may not be covered under the basic terms of your contents cover. So check with your insurer and take out separate cover if necessary.
Most standard contents insurance policies will cover your belongings up to a specified amount, say £40,000. This is the maximum amount you could claim for.
However, most policies will also limit the amount you can claim for any one item. This is known as the single item limit and is often around £1,500 to £2,500. If you have an item, such as a diamond ring, that is worth more than this, you will need to list it separately on your policy.
8. Unusual properties may need specialist cover
Insurers like brick built, slated roofed properties so if you own an unusual property, such as a renovated windmill or a listed building, or your property has an unusual feature, such as a thatched roof, you may have to take out specialist cover.
Premiums for unusual properties tend to be higher because they pose a greater risk to insurers. For instance, listed buildings have higher rebuild costs, while thatched roofs present a greater fire risk.
9. You can choose the excess
Just as with car insurance, most home insurance policies come with both a compulsory and voluntary excess, and choosing to pay a higher voluntary excess can bring down the cost of cover.
However, you need to make sure you can afford to pay the excess in the event of a claim.
10. A no claims discount can lower the price
Again, as with car insurance, building up a few years’ worth of NCD can bring down the cost of cover by as much as 40%. So always think twice before making a claim, particularly if the cost of a claim comes to little more than the cost of your combined excess, as it may be worth footing the bill yourself rather than losing your NCD.
Please note: Any rates or deals mentioned in this article were available at the time of writing.