If you have a mortgage or are in the process of arranging a mortgage against a property then the lender will insist that you have at least Buildings Insurance in place on completion of the mortgage. (For purchases, the policy needs to be in place on exchange of contracts.)
As the name suggests, Buildings insurance covers the actual building and also the permanent fixtures and fittings such as baths, toilets, fitted kitchens, and interior decorations. Usually, all items that are not taken away when you move home are covered with buildings insurance. Often outbuildings such as garages, greenhouses and garden sheds may also be included.
Generally, most buildings insurance policies will cover damage to your home by fire, lightning, explosion, earthquake, theft, riot and malicious persons, storm and flood, aircraft or things falling from them. Subsidence, heave and landslip, falling trees or branches, impact by vehicles or animals, breakage or collapse or aerials, escape of water from tanks or pipes and escape of oil from fixed heating installations.
All buildings insurance policies offered by individual home insurance companies will be different, therefore, always check your buildings insurance policy carefully to see what is covered and if you are unsure check with the home insurance company concerned.
You should ensure you have enough buildings insurance cover to pay for the full cost of rebuilding your home, which may bear no relation to the actual worth of your home. If you are either remortgaging or buying a new property then your valuation report will give you this important figure. Often, policies will now insure rebuild up to a specified limit and as long as the rebuild cost is not over this figure then you will be fully covered. Many home insurance companies apply index linking to your buildings insurance policy at each renewal date. This means that the sum insured is altered automatically by the home insurance company whenever there is change in the rebuilding cost. Do not rely on this alone to keep your sum insured up to date as if you are under insured then it can affect the amount of any claim paid.
Most home contents insurance policies will cover you for just about everything you would take out of the house if you moved home, including furnishings, televisions, videos, carpets, personal effects and valuables. It will be worth checking whether your home contents insurance policy is new for old as ‘New for Old’ means you will be paid the full cost of repairing damaged items, or the full cost of replacing them with equivalent new articles if they are stolen or destroyed. If you do not have new for old home contents insurance cover, a deduction will be made from your claim payout for wear and tear and depreciation.
Generally home contents insurance will cover possessions for loss or damage in the home against fire, flood and theft. Each home contents insurance policy offered by individual insurance companies will be different and may include accidental damage cover. There are policies that will also allow you to insure possessions outside of the home against loss or accidental damage and you can also extend cover to include, freezer food, travel abroad, personal money, credit cards, pedal cycles and legal expenses. However, it is likely you will be charged additional premiums, and home contents insurance cover amounts may be limited.
Levels of cover vary on different policies and the majority will insure your total house contents for specified limits such as £20,000 or £40,000. For most people these sums insured will be sufficient but if not, the contents must be insured for full replacement value as in the event of a claim, it will effect the amount of the claim paid out if you are deemed to be under insured. You may have to insure expensive items such as jewellery or Hi-fi separately with your home insurance company as the single article limit may be less than the expensive item.