If your home is your castle, then home insurance is the moat and drawbridge that provide essential protection for the building and your belongings.
As with most kinds of insurance, it pays to know how home insurance works - the cover it offers, its limitations, and how you can get the best deal. To help you make the most of this important cover, we have compiled a list of the top 10 things you need to know about home insurance.
1. There are two types of home insurance
Buildings insurance, as you might expect, covers the buildings and its permanent fixtures, while contents insurance covers your belongings and furnishings. Having both types of cover should protect you against every eventuality and you can get discounts when you buy both buildings and contents insurance from the same provider.
2. Your contents insurance policy's 'sum insured' must be accurate
Unless you stop and think about it, you could seriously underestimate the value of your home's contents.
Think about how much all the technology in your home is worth, not to mention any jewellery, furniture or white goods. Research shows the average family of four values their contents at £25,000 when the true cost would be closer to £55,000.
If you 'under-insure' by, say 25%, your insurer has the right to reduce any claim you make by the same proportion.
3. Rebuild value and market value are not the same
When you take out buildings insurance you will be asked to specify a rebuild value for the property. The greater the rebuild value, the more you can expect to pay for cover, which is why it is important to get an accurate valuation.
If you live in an area where house prices are very high, the market value could be a lot higher than the actual value of the materials and labour required to rebuild it. Similarly, if you live in an area where house prices are low, the rebuild value could actually be higher than the market value.
4. Security makes sense
Fitting security equipment such as alarms and door and window locks can bring down your premiums as it makes it more difficult for would-be burglars to get in and reduces the chances you will make a claim.
If you have security equipment it is vital that you actually use it, though. In the warmer months we often open windows and doors to let some air in, but if someone were to gain entry to your home through an open door or window and steal something, your policy might not cover you.
Insurers will sometimes refuse to pay out in cases of unforced entry, as the policyholder failed to take "reasonable care" of the property.
5. Protection outside the home
Some home insurance contents policies offer cover for items away from home, either as standard or as an optional extra. For example, with 'all-risks' cover you could insure your luggage and its contents against the risk of their being lost abroad or in transit, or get cover for a laptop used at work or school.
6. Expensive items
Your insurer may ask for details of any particularly expensive items in your home, such as antiques which can be expensive or difficult to replace. It is important to give them accurate information because failing to do so could lead to difficulties in the event of a claim.
7. Don't forget the garden
Some people's gardens can be full of valuables, from ornaments, water features and plants to sheds, garages and their contents.
Expensive tools and garden equipment can be attractive to thieves so it is important to secure your outbuildings as best you can, as well as taking out cover for them.
Garden cover will not necessarily come with your home insurance, but will offer cover for your outbuildings, plants and shrubbery and contents in the open such as barbecues and ornaments as optional extras.
Home insurance policies carry a compulsory excess which you have to pay to get a claim rolling.
Buildings cover tends to have two excesses: one for claims relating to fire, flooding and storm damage, and another for subsidence. The excess for subsidence will vary depending on the level of risk where you live. It will probably be at least £1,000 and could be as high as £5,000 in subsidence-prone areas.
9. Unusual properties
Unusual or unique buildings such as listed properties, thatched cottages can have higher rebuild values. Older buildings might also be considered at greater risk.
It is important then to shop around to make sure you get the best price for the level of cover you need. There are specialists insurers out there who have experience providing quotes and cover for more unique and unusual properties. Taking out a policy with a specialist provider should give you peace of mind in knowing your cover is tailored to your property.
10. Policy add-ons
For additional premiums you can add extras to your home insurance policy, such as legal expenses cover, which would meet the costs of legal action if you were, for example, drawn into a boundary dispute with a neighbour.
Home emergency cover will help you deal with matters such as boiler break-downs or blocked drains - the kind of unpredictable, spontaneous problems around the home which need addressing immediately and can otherwise prove costly.
You can also pay for cover against accidental damage, for when the neighbours' kids put a football through your kitchen window.
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