Here’s our guide to getting the right – and most affordable – home & contents insurance for you.
Follow the steps below to make sure you’re getting the cover you need. We also help you to avoid two costly mistakes: over- or under-insuring yourself. (Note: As the Uinsure policy most of our advisors offer only has a standard £1Million cover available on Buildings, drawing the client’s attention to ‘over-insuring’ the Buildings may not be wise from a sales perspective)
1. Understand the Difference between Home Insurance and Contents Insurance
Home insurance is the catch-all term for home and contents insurance. They’re not the same though.
Buildings insurance is what you buy to cover the physical structure and permanent fixtures and fittings of your home.
So you may get a pay out, if for example, a tree fell on your roof. Policies vary from one insurer to another depending on what you’re covered for. But in most cases, you’re eligible to claim if your home is damaged by: natural occurrences such as storms and floods; vandalism; subsidence; falling trees; fire; vehicle collisions or water damage from leaking pipes.
Contents insurance can provide cover for your belongings, furniture and the objects inside your home, often including those in outbuildings such as sheds and garages. So you may get a pay-out if there were a leak or a fire, and your furnishings or electrical goods were damaged,. or you had to refit your kitchen. It can protect your possessions from occurrences such as: fire damage; floods and storms; natural disasters; vandalism or malicious damage or burglary.
2. Decide what You Need in Terms of Home Insurance
If you’ve a mortgage on your home, your lender will in most cases demand that you have buildings insurance. If you’re a landlord, it’s your responsibility too to get buildings insurance for your property.
Whether you’re renting or a homeowner, you don’t have to have contents insurance. But you may be wise to get it. This is the type of cover that most people tend to skimp on but it could be an expensive mistake.
A tip. If you need both building and contents insurance, buying it as a combined policy is often cheaper and simpler.
3. Calculate the Re-build Value of Your Home for your Buildings Insurance
For buildings insurance, this is crucial. But many people misunderstand what is required. They give the market value of their property instead. That’s a big mistake as you may be over-insured and pay unnecessarily heftier premiums.
The rebuild cost is how much it would cost to completely rebuild your home. It includes the price of labour and materials. It will almost certainly be lower than your home’s market value.
So how do you determine this? The fastest way is to use the free Association of British Insurers’ calculator. Or, you can commission a building surveyor. You should do this if you’ve a home that’s listed, historic or not built of brick. For most people, however, the ABI calculator will do a decent job.
4. Calculate the Value of Your Goods for Your Contents Insurance
Your insurer will likely ask you to give a total figure for the value of your contents. This is called a sum assured policy. The trick here is not to under-insure. It could lead to your getting less than the value of your items when you claim.
Say you tell your insurer you have £30,000-worth of possessions when you in fact have £60,000. When you make a claim, they may well inform you that you only have half of your contents protected. Then they’ll base their pay-out on this.
In fact, the average home has £55,000 worth of contents. Adding yours all up may seem impossible. But there are several free useful contents calculators online. Using two of these and checking that the result is roughly the same will give you peace of mind that you’re properly covered.
Some insurers though work it out differently. They may offer you a bedroom-rated policy. This will work out your cover on the basis of your number of bedrooms. The sum is usually right for most households.
An alternative to this type of policy is the more costly unlimited sum insured policy. This means you’re covered whatever your contents.
5. Decide what Type of Contents Cover You Want
This is important as it will affect your premium.
For total peace of mind, opt for new for old cover. With this, the insurer will replace your items at today’s equivalent price. This type of policy costs cost more. But, if your 10-year-old sofa is ruined and cost you £3,000 to buy but is only worth £500 today, you can see the value. New for old is often well worth choosing rather than have to replace costly furniture and electrical goods.
A cheaper policy is indemnity cover. This takes into account the wear and tear of the item so you’ll only get the current value of your possessions. Your premium will be lower but this could be a false economy.
There are several extra options you can plump for too. All risks (or Personal Possessions Cover) may cover items taken outside the home, such as jewelry, wallets and mobile phones. If you take these on holiday with you, this could be useful but may also be covered by your travel insurance. Legal cover may cover your court costs if, for example, the damage is down to dispute with a neighbour. Freezer contents cover may pay out should food in your fridge and freezer become spoiled due to a power outage. Sports equipment cover may insure items such as your golf clubs and skis. Garden equipment cover may insure lawn mowers, hedge trimmers and power tools.
For a full guide on getting the right home insurance, see our article here.
For personalised advice on the best home insurance policy for you, contact us here.