When you become a homeowner, your first instinct is to make sure that your new investment is safe and protected. Home insurance is one of the essentials that should be considered to not only provide this protection, but to give you peace of mind.
What is home insurance?
There are two types of home insurance; building insurance and contents insurance.
Building insurance covers the cost of repairing your home if it gets damaged. It is there to protect the structure of the house and any permanent structures inside the property.
Contents insurance covers your belongings that are inside your home. A common rule used is that your contents is the things you would take with you if you were to move home. Your contents can be anything from electrical items to furniture, and the cost of these items if damaged or stolen could be costly if you are not covered.
Is home insurance compulsory?
If you intend to purchase your home with a mortgage, for some lenders it will be compulsory to have building insurance for your property. On the other hand, contents insurance isn’t compulsory, and it’s completely up to you to if you want to insure the belongings in your home.
What does building insurance cover?
Building insurance only covers the structure of your home. This includes:
- Doors and windows
- Fitted kitchenware
- Fitted cupboards and bathroom suites
Most building insurance policies should protect you from:
- Storm damage
- Falling trees
- Explosion e.g. gas leak
- Vehicle collision with the building
- Burst and frozen plumbing
What does contents insurance cover?
Contents insurance only covers the things you own that are in your home. This includes things like:
- Electrical’s e.g.TVs, laptops and games consoles
- Furniture e.g. Beds, sofas and tables
- Entertainment e.g. Video games, DVDs and books
- Ornaments and antiques
- Clothes and jewellery
How much cover do I need?
The amount of cover you need for building insurance depends on how much it will take to completely rebuild your home if it is damaged. The cost of rebuilding your home is not the same as the amount you paid for your home, or its current value if you were to put it on the market. The cost to rebuild you home is usually less than the purchase price, so it’s important that you don’t over insure or under insure yourself.
The amount of cover you need for contents insurance depends on the value of the things you own. You want to get enough cover to replace everything you own in the event that something happens to your home. The average four-person household has a contents value of approximately £55,000 (Money Supermarket). You can use a content calculator to work out the approximate value of your belongings or you can make a note of the things you own that are worth more than £500.This will make it easier to find a policy that is suitable for you.
Why should I get home insurance?
If you don’t need a mortgage to purchase your home you don’t need to get building insurance, but it’s in your best interest to do so. If something structurally happens to your property and you don’t have building insurance, you could potentially lose your home or have to cover a large repair bill. It’s the same with contents insurance. It may not be compulsory, however in the event of a theft or a fire you could lose your valuable items and have no way to replace them.
Home insurance is another expense that should be considered when it comes to becoming a homeowner. It is an investment that protects your property and your peace of mind.
T K Williams-Nelson