While you can�t plan for every eventuality as a homeowner, you can insure yourself and your home against most of them
If you’re looking for a mortgage then your lender will probably offer you its home insurance policy, either on top of your mortgage or as part of the mortgage deal.
While dealing with both at the same time might seem an efficient use of your time, do make sure you’re getting value for money.
You may find that a mortgage with a slightly higher rate of interest but no compulsory insurance turns out to be better value than a lower rate with an insurance policy attached.
When you do start to shop around for home insurance, there are a few things you should know. First off, you will need to buy both buildings and contents insurance.
Buildings insurance
Buildings insurance covers the basic fabric of your home, including the bathroom and kitchen fittings. It also insures you against unforeseen events, such as flood or fire and even subsidence.
As a buyer you need to have a buildings insurance policy organised by the time you exchange contracts on your property.
If you are buying a flat, the buildings insurance may be taken out by the freeholder and premiums will be included in your service charge.
The cost of the insurance will depend upon the rebuilding cost of your home, not on the amount that you have paid for it. The rebuilding cost will be detailed in your survey.
If you are in doubt, you can work out the cost by using the Association of British Insurer’s (ABI) rebuilding cost calculator on its website.
Contents insurance
Contents insurance covers the things you keep in your home, from furniture and fittings to personal belongings.
Policies offer different levels of cover and the price will reflect the extent to which your belongings are insured. It’s up to you to get the right balance of price and cover. For example, some policies put individual and total limits on high-value items.
There will also be an overall limit on the amount you can claim, called the sum assured. This may be set by the insurer or by you.
You will find that the typical minimum sum assured is £30,000, although a few insurers will quote for as low as £20,000.
To work out how much your sum assured should be, make a list of all the things in each room in your home and work out how much each is worth or how much it would cost to replace them.
As well as the obvious things like televisions, stereos and jewellery, include furnishings such as curtains and carpets, your clothing, food and so on.
Your contents insurance may also cover you for items you take out of your home. Insurers do tend to set claim limits on these. Cover up to a general limit is typical for things like bicycles.
If you don’t have one, then you can ask for that cover to be removed. Equally, if you’re a keen cyclist the cover may not be enough, so you might prefer to get a specialist policy.
You may be given the option to add an accidental damage extension. This means that your belongings are covered even if they are damaged by you.
Excesses
You can reduce the cost of your premiums by accepting an excess on any claim. These are available on both buildings and contents policies.
An excess is where you offer to pay the first part of a claim. So, for example, if your camera gets stolen and you have agreed to a £50 excess, when you make your claim the money you receive will be less £50.
The excess for a buildings insurance policy is likely to be higher and there will be a separate, even higher excess on subsidence claims of up to £1000.
Getting a quote
When you shop around for insurance you will be asked a number of questions by the insurance company. Below is a guide to what you might be asked.
Construction Your insurer will want to know how your home has been constructed: for example, bricks and roof tiles or stone and slate.
If you are asking for buildings insurance, how and when the house was built will affect your quote and maybe whether you are offered a policy at all.
Some insurers will not insure more unusual properties, such as those with thatched roofs or those made out of non-standard building materials.
Rebuild cost For buildings insurance the insurer also needs to know the rebuild cost of your home. If you have just bought a home this should be shown on the valuation.
If it has been a long time since your property was valued you might think about having it done again to make sure your policy is up to date.
This is certainly a good idea if you have done any home improvements, such as built an extension or conservatory, which would increase the cost of rebuilding your home.
Your postcode Your postcode will tell the insurer if you live in an area prone to flooding or subsidence or if the area has a high crime rate.
Use of the home The insurer will want to know whether you are the occupier of the property and if you plan to use your home for any business purposes.
Insurers are happy to have you at home during the daytime, because that means there is less chance your home will be burgled.
Your job The insurance company will want to know your occupation, wherever you work. If you have a high-profile job this may affect your premium too.
Your claims record If you have an existing insurance policy for your home and contents, the insurer that is quoting for a new policy will want to know about any claims made during the last five years and will ask you to give details.
Where you have made no claims you may qualify for your new insurer’s no-claims bonus. This means your premiums are reduced if you have made no claims for a set time period. You will also be asked about any convictions over the last few years.
Buying insurance
When shopping around, keep a note of the things you tell each insurer so the quotes you receive are comparable.
And if you’re moving in somewhere make sure you have your contents insurance arranged from the day you move in so that your possessions are insured as they are being moved.
Most insurers will include this cover as standard, but there may be terms. For example they may refuse to pay out if you haven’t employed professional packers. Your removal company may also offer insurance.
If you have access to the internet this is a good place to start. Many insurers will give you a quote online within a few minutes, or you could try an online broker which will give you several quotes from a panel of insurers.
The next step is to try phoning some of the direct insurers. You may be offered a combined buildings and contents policy. This may work out cheaper than buying two separate policies.
Make sure you get the cover you need. Some insurance companies also quote based on the number of rooms in your home. Again, this may work out cheaper than a standard policy, especially if you have a large home.
