If your home is damaged or needs repair, you’ll want to have insurance in place. It’s not a legal obligation, but it can be compulsory. This guide answers some FAQs, including when you will/won’t be covered and when you should take out a policy.
What is home insurance?
There are two types of home insurance: buildings and contents insurance.
What is buildings insurance?
Buildings insurance covers the structure of your home, such as:
- Walls
- Windows
- Roof
- Permanent fixtures and fittings (e.g. fitted bathroom)
Essentially, it covers the cost of rebuilding your home or replacing any damage.
When will you be covered?
All insurance policies vary, so it’s vital you check to see when you’re covered and for what. Insurance cover should insure your home in the event of a fire, flood, burst pipes or subsidence (to name just a few).
Usually, you can also claim in circumstances such as:
- Vandalism
- Car collisions
- Storms
- Oil leaking (e.g. from heating system)
When won’t you be covered?
Exclusions vary, but generally speaking, there are some cases where you won’t be covered.
Depending on your policy, other structures might not be included (e.g. the garage). It’s vital you know when you’re covered vs. when you’re not – don’t leave it until it’s too late to find out.
Many policies also don’t include gates, fences, leaking gutters, wear and tear, or some pest infestations. Also, if your home is unoccupied for a period of time, you may not be able to claim.
How much buildings insurance cover do you need?
Insure your property for the amount it would cost to completely rebuild it. This is not the price you paid for your home, or its current value if you were to sell. The best way to gauge your rebuild cost is by using the BCIS calculator.
This looks at your property type, location, plus the number of bedrooms and bathrooms.
When will you need extra cover?
It’s important to be aware that even if you take out an insurance policy, you may not be covered in every circumstance. Be sure you understand the basic level of your policy cover as you may need extra cover for things like:
- Accidental damage
- Flooding – check if you live in a high-risk area
- Glass (e.g. windows or conservatories)
You may also want to consider indemnity insurance, which covers a variety of different scenarios, usually a legal defect with the property that would be difficult or time consuming to fix, or result in a financial loss.
This could be restrictive covenants, for example. These apply restrictions on a property, for example major renovations or building work. If a previous owner has breached one of these, you can take out insurance to protect you if there are any future problems.
What is contents insurance?
Contents insurance essentially protects your ‘stuff’, against theft, fire or damage. For example furniture (e.g. wardrobes, dining tables, beds) or belongings (e.g. books, mobile phones, other electrics). It can also be used for certain types of flooring, such as carpet.
Do you need home insurance?
Buildings insurance isn’t a legal requirement, but it’s a good idea to get it to protect your home.
Plus, most of us need to get a mortgage in order to buy a property, and many lenders will make getting buildings cover a condition of the loan. This means you’ll need to take it out in order for the funds to be released.
Do I need home contents insurance?
Contents cover, on the other hand, isn’t a requirement – it’s entirely your own choice. Many people choose not to get protection, while others feel the risk isn’t worth it.
The contents of your home can be more valuable than you might realise, but it’s vital you check your policy closely. Most insurers limit the payout for a single item. So, if a particular piece of jewelry worth £2,500 was stolen and the payout limit was £2,000 – you have a £500 shortfall.
It’s important you provide accurate details of any valuable items you want insured, failure to do so could invalidate your policy. This could result in the insurer refusing to pay out in the event of a claim.
What if I own my home outright?
If you own your property outright, there’s no legal obligation for you to take out any insurance. Although, your home is likely the biggest investment you’ll ever make, so it’s a good idea to protect it.
Rebuild costs, or full price of repairs, or replacing your belongings, will likely be higher than paying for an insurance premium, but the choice is yours.
What if I live in a leasehold property?
The way insurance works here entirely depends on the terms of your lease, for example it could form part of your service charge specifications. It might be that communal areas are the freeholder’s responsibility, while you need to cover the parts of the building you’re responsible for. Meanwhile, some leaseholders club together to cover buildings insurance.
Ensure you check the leaseholder agreement carefully so you know where you stand.
If you’re buying a leasehold property, your solicitor should explain to you what your lease determines in terms of insurance. If you are in any doubt, always ask.
What if I rent my home?
If you rent, your landlord should have taken out buildings insurance – it’s not your responsibility to safeguard the property. However, you should consider taking out contents insurance to protect your belongings; they won’t be covered by your landlord’s policy.
What if I’m a landlord?
If you’ve taken out a buy-to-let mortgage, your lender will likely require you to take out buildings insurance.
However, check what level of cover you get; you may need a specific landlord policy in order to be fully covered. For example, if you offer a furnished property, you may want to make sure certain items are protected, particularly expensive pieces of furniture.
Different insurers offer different things, so it’s vital you check to see what policies are available to you – and what they cover.
When should you take out insurance?
If buying a property, it’s vital you take out insurance cover from the moment you exchange contracts. This is the point where you become legally responsible for the property.
So, if something happened to your new home before you moved in and you didn’t have insurance, you’d have to cover the costs yourself.
Where can I find the right cover?
We can help you save on your home insurance, and take the hassle out of the process. We connect people with experienced insurance advisers who can help you secure the correct level of cover at the best possible price.
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Last Updated: May 26th, 2021
