If you are unfortunate enough to suffer loss or damage to your home or personal belongings, the last thing that you will want to discover is that you are not insured or that the building and contents insurance that you thought you had in place will not cover you.
For many people, the first time that they really think about their home insurance is when they need to make a claim. It is vitally important, however, to make sure that you have adequate cover in place before a loss arises to ensure that the appropriate protection is there when you need it.
Building and Contents Insurance
You can protect yourself from loss or damage to your home or belongings by buying building and contents insurance. It is possible to buy cover for building and contents separately or as a combined policy.
If you are a tenant then you will probably not need to take out buildings insurance as this will be the responsibility of your landlord. If you are a homeowner, however, you will need to have it in place as a condition of your mortgage.
A buildings insurance policy will provide you with cover if your house or its permanent fixtures and fittings are damaged as a result of a peril that is listed in the policy. Perils covered usually include fire, flood, storm, theft, subsidence, falling trees and burst pipes as standard, although it is possible to purchase additional cover for accidental damage, for example.
It is a good idea to insure your contents whether you are a tenant or a homeowner. While you may not think that your belongings are valuable, if you were to lose them all in one go in a fire then it is likely that you would find it difficult to replace them.
Contents insurance is usually on a ‘new for old’ basis, which means that you will be provided with an equivalent replacement for any item that is irreparable. There are some policies, however, that operate on an indemnity basis, which means that deductions are made for wear and tear. It is important to check the policy’s terms and conditions.
The perils covered by a contents policy are often the same as those covered by a buildings insurance policy. Again, it is possible to buy additional cover. Accidental damage cover is popular, as is cover for personal possessions such as laptops when they are taken out of the home.
Landlord and Tenant Insurance
If you are a landlord then you should ensure that you take out an insurance policy that is specifically designed for landlords. Landlord insurance policies usually provide cover for the building, fixtures and fittings and the landlord’s legal liabilities.
Additional cover is available that can prove useful. Legal-expenses cover can help in the event that you need to take action against a tenant for non-payment of rent, while rent-guarantee cover can help if your property is empty between tenancies.
If you are a tenant then you should arrange your own contents cover – this will not be provided under the landlord’s insurance. There are a number of insurers who offer specific tenants’ policies, including some for those who live in shared accommodation such as students.
Whatever type of building and contents insurance policy you opt for, it is important to ensure that you have the right level of cover in place. If you do not have an adequate sum insured under your policy then you will not have enough cover in the event of claim. Similarly, if you over-insure then you are paying a premium for a level of cover that you will never be able to claim for.
When looking to insure a building you should get cover for the full rebuilding cost. This is different to the market value of your home and, depending on the area that you live in, could be more or could be less. Many insurers have calculators that can help you with assessing this. The Royal Institute of Building Surveyor’s Building Cost Information Service can also be helpful.
To work out the amount that you should insure your contents for, it is a good idea to run through all the items that you have in each room of your home and work out how much it would cost you to replace them all. Remember to include items such as clothes and crockery, as well as any items that you have stored in sheds and outbuildings.
If you have any high-value items then you should tell the insurer. Most policies have a maximum amount that will be paid out per item, so anything over this amount needs to be notified to the insurer so that it can be fully covered.
When arranging your insurance cover, it is essential that you familiarise yourself with the terms and conditions of the policy that you choose. It is pointless arranging and paying for adequate insurance cover for your home if you then invalidate it by accidentally failing to do something that the policy requires.
The conditions will depend upon the specific policy that you have. Common ones are that your home must not be unoccupied for more than 30 consecutive days and that you should notify the insurer of any change in your circumstances that affects the risk – for example, if you were at home all day but will now be out at work.
It is important to arrange adequate home-insurance cover so that you have appropriate protection if an unforeseeable event happens. By taking the time to make sure that the policy you have is suitable for your needs and that you understand the terms and conditions, you can ensure that the cover is there when you most need it.