Home insurance priorities
Knowing your onions on home insurance is not going to make you a hit at parties, but that doesn't mean it's not important. Choosing the right cover could be the difference between inconvenience and a catastrophe if disaster strikes.
Why is home insurance essential?
Let's start with what home insurance actually is. The term refers to two types of insurance: buildings and contents.
Buildings insurance covers the fabric of your home: walls, roof, floors, windows and permanent fixtures such as fitted kitchens and bathrooms.
Contents insurance covers things you keep within your home which are not part of the structure, like furniture, electrical appliances and soft furnishings.
There is no legal obligation to have home insurance, although it is a requirement for almost all mortgages. It is inadvisable not to have home insurance of any sort – you could be left with huge financial loss if something happens to your home. So how do you choose the right cover?
Selecting the right home insurance for you
The ultimate threat to your home is its destruction: you should have insurance that covers the cost of rebuilding your home if the worst happens. This is different from the market value, which also reflects factors such as land value and neighbourhood desirability.
Buildings insurance doesn't usually cover damage from terrorism, war or some natural disasters. If these are a concern for you, you might want to explore additional cover.
Now let’s think about the inside of your home. If you lost everything to flood, fire or burglary, what would it cost to get back on your feet?
Many people underestimate the value of their belongings. This may result in lower premiums but it is a big problem in the event of a claim. Let's say you value your belongings at £25,000 when they are really worth £50,000. If half are stolen in a burglary, your insurer may refuse to pay more than £12,500 (half the insured amount) even if the actual loss is greater.
To calculate the value of your belongings, make an inventory of each room in your home: TVs, clothes, computers, lawnmowers, carpets, sofas and so on. Write down what it would cost to replace each possession. It might be that your insurer caps the cover for individual items, so if you have a £7,500 antique bed you might want to insure it separately.
Contents insurance generally provides cover on a new-for-old basis so you can buy new replacements. However, if your belongings lean towards being well-loved rather than brand new, contents insurance on an indemnity basis might work best for you.
Indemnity cover means your insurer would pay out the current value of items rather than the price of replacements. For example, if you have a washing machine which works fine but is more than ten years old, you could secure lower premiums by agreeing to accept its resale value rather than the cost of a replacement.
Indemnity cover works particularly well for people who are happy to replace belongings with second-hand goods of around the same age or value in the event of a claim. It is not such a good option for people who would want to replace damaged belongings with new items.
Specialist or non-standard home insurance
Every property is unique, but there will be some instances where homes with special features need more than just the standard level of buildings cover. Below are some examples of when specialist home insurance – or non-standard home insurance as it’s also known – comes into play…
Listed buildings and unusual construction
Calculating the rebuild cost of some buildings is not straightforward. For example, they might be Listed buildings that feature on the Statutory List of Buildings of Special Architectural Interest, or feature unusual building materials. Timber and steel-framed properties usually fall into this category.
Vacant properties and holiday homes
Many insurance policies provide only limited cover for unoccupied properties. If your holiday home is empty much of the time, or you work away for long periods, you should ensure this is covered by your buildings and contents policies. Security measures (alarms, approved locks and sensor lights) can protect vacant properties and may also bring down your insurance premiums.
Are you a student or a tenant?
If you are the tenant of a rented home your landlord will almost certainly not provide you with contents insurance. Rented homes with shared entrances or lots of previous key holders can be more vulnerable, making insurance all the more important.
Students often overlook insurance, but multiple occupancy homes can be targets for thieves looking for laptops. Students can be added onto the policy for their family home, or alternatively opt for separate insurance. Common mistakes include not checking for bicycle cover and assuming cover is in place for both holidays and term time.
Subsidence, flooding and thatch
Obtaining home insurance can be more of a challenge for properties with known issues like regular flooding, or trouble with subsidence (where the ground beneath your building shifts). Certain building materials such as thatched roofs or flat roofs also carry higher risk and can be more complex to insure.
Insurance for these types of properties is generally more expensive to reflect the higher level of risk, but insurers will often discount premiums if you take precautions. For example, thatched roofs can be treated with fire retardant and homes at risk of flooding can fit flood barriers and sewage valves.
Other risk factors
If you’ve made a lot of home insurance claims in the past (adverse claims history), you have criminal convictions, you’re running a business from home or you’re renovating your home, you may well fall into the specialist home insurance category. Non-standard insurance also extends to landlords who require special let property home insurance. Designed especially for landlords, this covers things like rent guarantee, legal expenses and more.
Don't assume accidental damage will be covered by your home insurance – you may need to take out extra cover. Although policies generally provide some cover, for example for damage to structures such as pipes and cables, it pays to double check.
There is often cover under contents policies for damage to home electronics such as TVs, games consoles and computers. A common exclusion is damage caused by cleaning, maintenance and repair to your home.
Computerquote Insurance - here to help
We understand that insurance can be complicated and confusing at times. That’s where we come in. We can help you find the right cover for your needs from our panel of UK insurers. Call us on 0800 389 9949 or 023 9224 7870 or get a quote online.