Nobody knows what tomorrow will bring, but home insurance policies can give you peace of mind that at least you won’t lose out financially when the unexpected happens. In this article we look at:
- A typical home insurance policy
- The types of home insurance
- How much home insurance is roughly
- House insurance when renting
What is a typical home insurance policy?
There are two types of home insurance cover. Buildings insurance covers the damage to the structure of the property or its fittings or fixtures. In other words, anything that you’d leave behind if you moved house. When taking out a mortgage, this cover is compulsory as your mortgage provider wants to protect their investment.
Home contents cover is an insurance policy which protects all your personal belongings from loss, theft or damage. This would include all your furniture, clothes, domestic appliances and so on.
You should always read the small print when taking out home insurance because policies vary slightly from provider to provider. Generally, a basic home insurance policy protects you from loss and/or damage caused by fire, theft, adverse weather conditions, floods, etc.
Depending on your personal circumstances, there are a number of optional add-ons which you might choose to add to this basic cover, but only after discussing the matter with your insurer to make sure they are suitable. The most common include:
- Accidental damage.
- Personal belongings to cover items which are regularly taken out of the home like mobiles or laptops.
- Extra cover for valuable items such as antiques or jewellery which exceed the insurer’s single item limit.
- Legal expenses (in case you’re sued for an accident which occurred on your property).
- Additional cover if you work from home.
How much is home insurance roughly?
The average cost of a buildings insurance policy is £258 per year while home contents insurance works out at an average of £127. It can be significantly cheaper to purchase both types from the same insurance provider as a joint policy costs, on average, £307 per year.
However, these prices are simply a guideline because the cost of your policy depends on a number of variables. The most important is your excess. This is your financial contribution to any claim you make from your insurer. If you choose a higher excess, you can reduce the price of your home insurance.
Other variables which play a role when your insurer is calculating the price of your policy are:
- Your postcode.
- The size/condition of the property.
- The value of your possessions.
- Whether you’ve chosen add-ons to your basic cover.
- Whether you’ve made previous claims on your home insurance.
Do I need home insurance when renting?
It isn’t compulsory to have home insurance when living in rented accommodation. If a structural problem like a leak caused damage to your belongings, then your landlord would be responsible. He could make a claim under his own home buildings insurance as long as the property had been properly maintained. However, his policy wouldn’t cover you for accidental damage or the theft of your personal belongings. For this reason, it’s advisable to have home contents insurance even if you aren’t a homeowner.