Home insurance tends to fall into two categories: buildings and contents. You might be wondering if you need both. To help you understand the difference, here we explain both types of insurance and what you might need depending on the property you live in.
What is Buildings Insurance?
Buildings insurance covers the bricks and mortar of your property against damage from major incidents including fire, flood and subsidence. These policies cover the building itself, including the roof, usually the outbuildings (such as a garage, garden shed, or greenhouse) and permanent fixtures and fittings (e.g. kitchens and bathrooms). They don’t usually cover garden walls, gates or fences.
If you own your home (or are about to buy one), we strongly recommend that you have a buildings insurance policy. While it isn’t a legal requirement, you will find that many mortgage lenders insist that you have one.
MAKE SURE YOU HAVE ADEQUATE COVER
What many people don’t realise is that buildings insurance doesn’t usually cover the value of your home, but rather the cost of rebuilding the property. To work out an approximate idea of what this might be, you can use this rebuild cost calculator from the Building Cost Information Service (BCIS).
It’s important to make sure you don’t over or under-insure your property. You don’t want to find you have to pay thousands of pounds yourself because your policy didn’t provide adequate cover. Conversely, you don’t want to pay too much for your policy because you’ve overestimated the value.
In addition, if you live in or near an area that is prone to flooding, or are planning to move to one, you should check that your insurance will cover you for such an event. Similarly, if your property is very near large trees, check that the insurance will cover you adequately.
MAKING CHANGES TO YOUR PROPERTY
If you add an extension to your home or change the structure in any way, remember to let your insurer know. If you don’t, the changes won’t necessarily be automatically included in your policy and you won’t be covered should you need to make a claim.
What is Contents Insurance?
Contents insurance protects your belongings should they be stolen or damaged by fire. It may also cover natural events such as flooding or accidental damage such as spillages or breakages.
The contents are the items you would take with you if you were to move house, including your furniture, kitchen equipment, technology (computers, phones, televisions etc.), clothes and other personal belongings. Contents insurance will cover these items, as well as some items kept outside, such as bicycles, garden furniture and equipment.
DON’T UNDERESTIMATE THE VALUE OF YOUR CONTENTS
Evaluate the contents of your home carefully when taking out contents insurance. If you underestimate the value of your contents, this could mean that you don’t receive the full sum lost in the event of a claim. You can find a useful contents insurance calculator on confused.com.
Also check what your insurance will include and whether you have to name any specific items on the policy. Some outdoor equipment or those over a certain value (such as computers, televisions or jewellery) usually need to be specifically identified.
AVOID PAYING TWICE
Many contents policies will also cover some items you frequently take with you from home – such as smartphones, laptops, handbags, purses and credit cards.
It is a good idea, therefore, to check whether you have any individual insurance for some of these portable items to avoid paying for cover twice.
What is a Combined Policy?
A combine policy covers both your buildings and contents insurance in one policy. These are ideal if you own a house and can be more cost effective for you – insurers usually offer better deals for having both buildings and contents insurance with them.
What type of cover do I need?
This very much depends on the type of property you live in. If you own the freehold (usually for a house), it’s generally a good idea to have both buildings and contents insurance, or a combined policy. That way your property and belongings are covered inside and out.
On the other hand, if you rent or are a leaseholder, you may only need contents insurance, as your landlord or freeholder is usually responsible for the buildings insurance. But they will most likely charge the cost back to you through your rent or management fees.
CHECK THE SMALL-PRINT
If you don’t own your property outright, it’s always a good idea to check your lease or tenancy agreement to find out what is covered by your landlord’s buildings insurance. In some cases, such as with some council properties, wallpaper or redecoration might not be covered in the buildings insurance, so you’ll want to make sure you cover this in your contents insurance.
IF YOU ARE A LANDLORD…
As well as having adequate buildings insurance in place to cover your property, you might need to consider some insurance for your own contents, where you supply furniture or white goods to your tenants, for example.
In summary, it’s a good idea to check what type of insurance you need for the property you live in, make sure you have adequate cover and check the small print to ensure everything is covered that you want included.
