The Complete Guide to Home Insurance

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No matter what type of property you reside in, home insurance is something that should be considered by all. There is no predicting what the future might hold and as such, having a range of safeguards in place to protect yourself against unforeseen circumstances is of upmost importance. This could be anything from paying the repairs for a damaged roof, or replacing goods that were stolen by burglars.

However, the insurance industry can often feel like the Wild West, so how do you know where to start? In our comprehensive guide to home insurance, we are going to tell you everything you need to know. By the end of reading it, you will be able to make an informed decision as to what type of package – if any, best suits your individual needs.

We’ll start by briefly explaining what home insurance is, followed by a breakdown of both building and contents insurance. After that, we’ll then explore some of the main areas of your home that you might consider insuring and in what circumstances you should be able to claim.

Finally, we’ll also cover some of the key factors that you need to consider prior to taking out, changing or cancelling a policy. Let’s start by making sure we understand just what we mean by home insurance.

What is home insurance?

In a nut shell, like all insurance policies, home insurance is in place to protect your property and/or the possessions within it, should things take a turn for the worse. Insurers will be able to offer you a range of different policies, depending on the breadth of the cover you are looking to take out. In most cases, an insurance plan will be tailored to your own specific circumstances, so prices can vary considerably depending on what you need.

There are a plethora of questions that you first need to ask yourself prior to taking the plunge. For example, what type of home do you live in? If you live in a listed building, then a conventional home insurance package might not be suitable. Do you hold jewelry at home that has significant value? Then once again, a standard home insurance plan might not be enough.

The most important thing is that you know exactly what your policy actually covers. Otherwise, if things do go wrong, you don’t want to be in a position where you are not eligible to make a claim.

Although home insurance is quite a generic term, we can normally break a policy down by two main areas – building insurance and contents insurance.

Building insurance

Building insurance is exactly what it says on the tin, insofar that it covers the bricks and mortars. In most cases this will cover things such as the walls, windows and roof, as well as permanent fixtures within the home. Such examples include bathrooms, kitchens and a central heating tank.

If you are in receipt of a sufficient building insurance plan, then you should be covered for most unforeseen situations. For example, a burst pipe might is more than likely out of your control, so it is possible that your policy will cover the costs associated with repair. Moreover, if your home suddenly became inhabitable – say for example because of a flood, then a policy might also cover the costs of temporary accommodation.

Nevertheless, it is important to remind yourself that not everything will be covered. Building insurance plans are fraught with an obscene amount of terms of conditions, meaning that even the slightest of actions could result in an illegible claim. For example, some insurers state that if your property in unoccupied for more than a month and they are not made aware of it, you are invalidating the policy. Furthermore, it is highly likely that general wear and tear within your home won’t be covered – and even if it was, it might not be worth making a claim anyway.

What does building insurance usually cover?

First and foremost, insurance providers are very clear on “fault”. What we mean by this is the underlying reason that has led to a claim. Known in the world of home insurance as Accidental Damage, if a claim is being made because of an accident, then you might not be covered. This most commonly involves spillages and breakages. If you are looking to cover accidental damage, then this might be classed as an add-on within your policy.

Most building insurance policies will cover Subsidence, which normally centres on foundation damage. This can include cracks to your walls, or nearby trees absorbing the moisture under your home. It is important to remember that if you do notice any damage that resembles subsidence, you need to inform your insurance provider straightaway.

Unfortunately, it is very rare – if not impossible, to be able to claim on Damp, as this normally falls under the scope of wear and tear. With regards to Pest Infestation – such as an invasion of rats or mice, in most cases you will need to take out an additional policy in the form of home emergency cover.

Although Roof Repairs are generally covered within a building insurance plan, providers will usually only play ball if you can prove that the damage is a result of bad weather. If you only need to replace a couple of tiles, then the provider will probably class this as wear and tear. Finally, with regards to Kitchen Unit Repair, you should be covered – as long as the claim is part of a fitted kitchen.

Am I legally required to take out building insurance?

In short, no – it is not a legal requirement to take out building insurance on your property. However, if you are thinking about applying for a mortgage, then lenders will almost certainly demand that you do. This does make sense, especially when you consider that the property in question is the lender’s collateral, should things go wrong.

Nevertheless, when going through the building insurance process, it is imperative that the policy covers the total cost of rebuilding the home. This figure doesn’t resemble the current market value per-say, but the actual cost of rebuilding it.

Contents insurance

Building insurance policies won’t cover the possessions that are stored within your property, so if this is something that you are looking for, you will also need contents insurance. Essentially, contents relates to the items that are within your home. The list is endless and could include anything from furniture, electronics and jewelry. Although contents insurance is an excellent safeguard against the threats of burglary, it would also come in use in other unforeseen events such as a water leak or fire. Moreover, in the event of a natural disaster, you might also be covered.

Although contents insurance is an excellent safeguard against the threats of burglary, it would also come in use in other unforeseen events such as a water leak or fire.

If opting for contents insurance, you will need to initially provide the insurer with an overall estimate of the goods you would like covered. The figures that you provide will need to resemble the costs associated with replacing them, so make sure that you avoid under-valuing them. Although this might sound like a daunting task, the most effective way of doing this is to make an inventory list in each room in your property, alongside its estimated value.

This list will need to cover the vast majority of items within your home. You will certainly need to account for things like carpets, curtains and furniture – but don’t forget to include other items such as clothes and cutlery. Ultimately, if the worst does end up happening, everything will need to be replaced – so it is best to include them within the inventory that you provide the insurer.

Contents insurance providers might also insert a clause that asks you to separate high-value items. Although this is normally any item worth more than £1,000, an insurer might stipulate a different figure for what they class as high-value, so always check. This will most commonly involve things like jewelry, art or cash that is stored within a safe. It is also possible that the insurer will cap the amount that they are willing to pay-out on a singular item, so again, make sure that you check this out.

Personal possessions cover?

It is also possible to obtain contents insurance for items that are lost or damaged outside of your home. Whilst personal possessions cover normally requires an add-on, some standard policies will include it. Most commonly, items that fall within the remit of personal possessions cover include mobile phones, jewelry, laptops and tablets. In other words, they are household items that are often taken outside of the property.

Are bicycles covered within contents insurance?

There is often a grey area regarding bicycle coverage. In most cases, if your bike is stored within your home, insurers will cover it up to a value of £350. If the bike is worth a lot more, then you might need to take a more expensive policy out or even better, get a tailor made bicycle insurance policy. Furthermore, some policies will also cover you if your bike is stolen from outside of the home. Once again, as terms and conditions differ depending on the policy, always check with the insurer.

How do I find out how much home insurance will cost me?

The most efficient way of estimating how much you are likely to pay based on your personal circumstances is to use a comparison website. In order to get a quote, you will need to provide the platform with a range of personal information.

Firstly, you will need to specify details on the property itself. This will include the year it was built, the number of rooms and what security safeguards are currently in place (such as a home alarm). You will likely receive a more competitive quote if your home is well-secured and located in a low-crime area, as insurers formulate a risk-assessment based on the information you provide.

To ensure that you revive an accurate estimate, you will also need to provide details pertaining to the exteriors of the house, which will include any signs of subsidence. Furthermore, the insurer will likely want to know the current situation of those residing within the building. This can be quite in-depth and could include the amount of people living in the home, their employment status and how often the property is left empty.

Finally, if you are looking for a quote on contents insurance, you will need to provide an estimate of the total value that you are looking to have covered. Although this might sound like a daunting task, if you do decide to go ahead with it, you will need to provide the insurer with an itemized plan anyway, so it is well worth doing this prior to obtaining a quote.

What about changing or cancelling my home insurance plan?

As with most insurance products, if you have taken out a new policy but since changed your mind, you should be able to cancel it within 14 days. If you do decide to trigger the 14-day cancellation period, the provider might charge you an administration fee.  Once this period has passed, cancelling a home insurance plan becomes trickier – at least in terms of costs.

Not only will you need to pay an early exit fee, but you might be charged the premium that is associated with your policy.

If you are looking to make changes to an existing plan – for example to purchase add-ons, then there is also a chance that you will still have to pay an administration fee. However, if you are increasing your policy, rather than reducing it – then it is also possible that the provider will waive these fees.

Guide to home insurance – The verdict?

Although the end-to-end home insurance process can at first feel intimidating, we hope that by reading our comprehensive guide we have cleared the mist. Ultimately, no matter which policy you go for – whether that’s building insurance, contents insurance or a combination of the two, it is imperative that you are extremely thorough.

Insurance providers will inserts significant quantities of underlying terms and conditions, so it is important that you know exactly what you are covered for and what you are not. In conclusion, although home insurance is yet another cost that you will need to add to your list of monthly outgoings, it is always best to err on the side of caution.

Kane Pepi

Kane holds a Bachelor's Degree in Accounting and Finance, a Master's Degree in Financial Investigation and he is currently engaged in a Doctorate - researching financial crime in the virtual economy. With a keen passion for research, he currently writes for a variety of publications within the Financial and Cryptocurrency industries.


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    Dennis Sanchez Reply

    I’m glad that you mentioned that using a comparison website is the best way of determining how much home insurance will cost. My wife and I are wanting to buy a home in the next couple of years. These tips will help us when we begin looking at home insurance coverage.

  2. Avatar

    Kane thanks for the article, we are about to renew the insurance on our home as some work has been done to it and not sure what we currently have would cover it. Your guidelines will help us get the right one for us and our home.

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