What is home insurance?

Depending on your policy, home insurance can cover the cost of repairing your home or replacing your belongings if they’re damaged or stolen. But how much home insurance do you really need and is it something you need by law? Here, we go through what to consider so you can decide what’s right for you.

What does home insurance cover?

Home insurance typically includes two types of insurance product:

• Buildings insurance – policies can help pay to repair or rebuild your home if it’s damaged structurally; for instance, if you need to carry out repairs after a fire or storm damage. 
• Contents insurance – this can help cover the cost of repairing or replacing furniture and belongings if they’re stolen or damaged. 

The specific events you’re covered for will vary depending on the insurer but on the whole, you can expect a buildings and contents insurance to cover loss or damage caused by:

• Fire
• Flood and storm damage
• Subsidence
• Vandalism and theft (or attempted theft)

You can buy buildings and contents insurance as a combined home insurance policy, or you can buy them separately (either from the same or different insurers). Broadly speaking, you’ll usually get a better deal if you buy a combined policy from one insurer but it’s worth comparing what’s on offer before making a decision.  

Does home insurance come with any added extras?

Most insurers will give you the choice of adding extra features onto your policy for a small cost. It’s entirely up to you whether or not to add them but some features can be handy, for example:

• Home emergency cover – provides help if a pipe bursts or your boiler suddenly stops working. Insurers will usually have a list of approved tradespeople so if you choose this option and have an emergency, it’s best to contact your insurer first rather than hire your own pro. 
• Accidental damage cover – pays to repair or replace items that have been unintentionally damaged or destroyed, for example, if you tripped and knocked over the TV. 
• Personal belongings cover – this covers items you might carry around with you including your laptop, jewellery, mobile phone or even your sunglasses. 
• Bicycle cover – contents insurance will cover the cost of a replacement if your bike is stolen from your home, but it usually won’t cover you if it’s stolen while you’re out and about – but bicycle insurance will. 
• Legal services cover – this can pay for professional advice and court proceedings if you find yourself in a legal dispute. Some insurers also include a 24-hour legal advice helpline. 

How much building insurance do I need?

For buildings insurance, the amount of cover you need (the ‘sum insured’) needs to be enough to cover the cost of rebuilding your home if it were completely destroyed. Crucially, the cost to rebuild isn’t the same as the market value of your home.

If you had a survey done on your home when you bought it, the report should give you its rebuild cost. If not, you can use the free buildings cost calculator from the Building Cost Information Service and the Association of British Insurers (ABI). 

Another way to work out rebuilding costs is to simply speak to your insurer, who will use what’s called the ‘bedroom-rated’ method. Insurers will use their own formula to calculate how much you might need based on the number of bedrooms in your home. This method will usually provide more than enough cover to rebuild your home, but the downside is that it can mean you’re over insured and could end up paying more than you need. 

How much contents insurance do I need?

Just like buildings insurance, your contents policy should cover the cost of replacing all your belongings. Some websites offer contents calculators based on averages, but this might not capture everything you have, or it might be more than the value of your possessions (in which case, you’ll end up over insured). 

To get an accurate figure, you should think about going from room to room, noting down all your furniture, and working out how much it would cost to buy each item again. 

You should bear in mind something called the single item limit (or single article limit). This is a cap on the amount you can claim for any one item. The limit varies by insurer but is usually around the £1,500 mark. If you have any expensive items or antiques, check their value, as you may need separate insurance for those pieces. 

How much does home insurance cost?

Cost will depend on the policy you choose, the value of the cover you need and whether or not you add on any extras. Insurers will also consider where you live. So, if you live somewhere with a higher-than-average crime rate, you can expect to pay a little more compared to someone who doesn’t. 

Insurers will also take into account whether you’ve made any recent claims (usually within the last five years). If you have, then this can also increase what you end up paying. 

Do I need home insurance by law?

If you have a mortgage, your lender could insist that you have buildings insurance to protect the property. Some lenders might even make it a condition of the mortgage. If you own your home outright, you don’t need buildings insurance.

However, whether or not you have a mortgage, if you don’t have either buildings or contents cover, it’s up to you to cover all costs if your home and belongings are damaged or destroyed. 

Do I need home insurance if I rent?

If you rent your home, your landlord is generally responsible for buildings insurance but it’s worth checking this in your tenancy agreement – just in case. If your landlord provides any items of furniture or electricals, then these should also be covered in your landlord’s own contents policy. 

As a tenant, you should only have to insure your own belongings with your own contents insurance policy (if you want). This includes furniture and possessions you bring with you to the property. If something were to happen and your belongings were damaged, you would not be able to make a claim using your landlords insurance. 

How do I make a home insurance claim?

In most cases, insurers will have a clear claims process and there will often be a claims helpline that you can call. This information should be in your policy agreement so it’s worth checking and keeping any phone numbers somewhere handy. 

If your home’s been burgled, you’ll usually need a crime reference number from the police. 

Compare home insurance for peace of mind

Comparing quotes is one of the quickest and easiest ways to find great value home insurance. But don’t forget to check any terms and conditions before you sign on the dotted line. 

Cheaper policies might look like a bargain, but they might not give you a level of cover you’re happy with and adding on extras will only increase the price. In contrast, pricier policies may already include a range of features, offering better value in the long run. 

 

Disclaimer: This information is intended for editorial purposes only and not intended as a recommendation or financial advice.

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