There are a number of different types of home insurance available, each one covering specific areas. The three main types are contents insurance, buildings insurance, and combined contents and buildings insurance.
Contents insurance, as the name suggests, provides cover for the contents of your home, whilst buildings insurance covers the outside structure of your property plus any permanent fixtures and fittings. Items that are covered under a buildings insurance policy include walls, windows, fitted kitchens and bathrooms. If you rent your home there is no need for you to take out buildings insurance as this is the responsibility of your landlord. However, it is important that you take out contents insurance to safeguard your possessions against events such as fire, flood or theft.
Homeowners can take out a combined package of both contents and buildings insurance to cover the building itself and the furniture and other items contained within it. In addition, there are a number of other add-ons that may be offered to you when taking out your policy.
Some insurers offer cover for accidental damage as part of the policy. However, this is often limited, for example, under the terms of a contents policy you may be covered for damage to your television, or, if you have a buildings policy you may be able to claim for damage to skylights and windows. If you require more extensive cover you will need to pay an extra premium which varies depending on the value of your items and on the policy itself.
Another addition that you might want to consider adding to your policy is personal possessions cover. Many insurers will provide cover under your household insurance policy for valuable items that you take outside of the home on a regular basis, these include items such as your mobile phone or tablet, and your handbag. This cover will incur an additional fee. Policies vary so check with your insurer to find out exactly what items are covered.
Many insurers will stipulate that your home must not be left unoccupied for more than thirty consecutive days. This is due to the fact that an empty property is more likely to attract thieves and therefore is more prone to being damaged. Insurers can restrict your cover if you do leave your property empty for a sustained period of time so be sure to inform them prior to a longer trip away from home.
In addition to exclusions regarding your property being left unoccupied there are also a number of other factors that you need to consider. Increasingly, nowadays many of us work from home, and many insurers will not cover liabilities that arise from your home-based business. There is also often a limit placed on the amount of cover offered as standard for high value items including jewellery, and audio visual equipment. It is wise to check your policy very carefully if you have very expensive possessions.
If you sublet your home and incur any financial losses due to theft then you may find that you are not covered unless there are obvious signs of forced entry. In addition, bear in mind that most policies will not cover you to replace whole sets of furniture if only part of them are damaged. Most often, you will only receive compensation for the damaged parts.
The majority of home insurance policies carry an excess. This is a set amount that you have to pay towards any claim that you may make. As an example, if you were to make a claim for £500, and you have a £100 excess then you would receive just £400 from your insurer. You will usually be offered a compulsory excess which is fixed and cannot be altered, and a voluntary excess which you can decide upon yourself. The higher you set the voluntary excess, the lower your premium but make sure that you set the excess to a price that you can comfortably afford.
When you make a claim it will be settled on either an indemnity, or new for old basis. Indemnity policies deduct an amount for wear and tear and monetary depreciation from any monies that you are awarded, whilst new for old policies will pay you the total cost of replacing or repairing damaged or stolen items with equivalent new items. Whilst an indemnity policy may incur a smaller premium it could leave you with a large amount to pay out yourself if you do need to make a claim.
With regard to buildings insurance your insurer can adopt a number of ways in which to determine the level of cover that you require. A bedroom-rated policy is based simply upon the number of bedrooms your property has, and there is a maximum limit to this sort of cover. On the other hand, a sum-insured policy is based upon working out the full cost of rebuilding your property from scratch and not the market value. The premium will then be set on this basis.
Both homeowners and tenants should think carefully about the sort of home insurance that they require and consider what, if any, optional extras they would like to incorporate into the policy. Be sure to shop around for the best deals available, and read the small print before you commit to taking out cover.