What is home insurance and do you need it?

Last updated: December 2020 | 4 min read

Home insurance covers the expenses related to managing a home. While there is no legal requirement to insure your home, there exist good reasons why you should.

Why should you insure your home?

If your home is not insured, you will have to pay for the expenses related to your home's management out of your own pocket, which can be substantial amounts and really set you back.

What are the types of home insurances?

You can insure your home either using a building insurance or contents insurance or both.

What is building insurance and when do you need to get one?

Building insurance will cover the expense related to repairing structural damage to your home. They usually cover damage to the roof, walls, floors and permanent fixtures caused by things such as fire or fallen trees, wind, hail, explosion smoke, and damage caused by criminal activity.

While there is no legal requirement to insure your home using building insurance, if you are taking out a mortgage, then in all probability, your mortgage lender will require you to have building insurance in place. This is because your mortgage lender would not want to be left out of collateral if your home is damaged.

What is content insurance and when do you need to get one?

Through content insurance, you can insure your personal belonging and possessions in your home (i.e. contents of your home) in the event of fire damage or burglary. Usually, mortgage lender do not require taking out content insurance.

Content insurance policies usually cover damage to the oven, washing machine, curtains, laptops, electrical content, furniture, jewellery. Some also cover bicycles and phones. It can also cover damage caused accidentally.

However, please note that the terms and conditions of the policy you take out will dictate which contents of your home will be insured.

What are the types of content insurances?

There are three main types of content insurances: Bedroom rates, the unlimited sum insured, and sum insured.

Bedroom rated

In this type of policy, the sum insured is calculated based on the number of bedrooms you have in your home. However, you should still make sure that the sum insured is enough to cover the contents of your home.

Unlimited sum insured

This will insure all the contents of your home without any limit. You will not have to stress about being underinsured.

Sum insured

For these types of policies, you have to carry out a small task of figuring out precisely the value of contents of your home. Your home will be insured against the fixed sum.

Does home insurance cover damage caused in all circumstances?

No. Insurances do not usually cover damage caused by Acts of God, Acts of war, frost damage. Therefore, it is essential you have understood the terms of the insurance policy and in which circumstances you will be insured.

Are all kinds of properties insurable?

Yes. However, the properties that are not covered by mainstream insurers require you to go to specialist insurers which will cost more.

You may find it challenging to insure the following properties:

  • Listed buildings
  • Thatched properties
  • Former council houses
  • Flats in big blocks
  • Properties such as lighthouses or converted barns

How much will it cost to insure your home?

The exact amount of premiums you will have to pay will be calculated based on several factors. These include the value, location and type of your home, your credit rating, your home's security situation, and the number of people living in your home.

What you should keep in mind when choosing a specific insurance policy?

  • If you are a freeholder, then you will be responsible for getting the insurance. On the other hand, if you are an owner of a leasehold, then the freeholder is responsible for building insurance, whereas you will be responsible for the contents insurance. Click here to find out the differences between freeholds and leaseholds.
  • You should definitely shop around to find the best policy in your budget.
  • If you seek a policy that has low premiums, it will likely have a high excess.
  • Some insurers start customers off on low premiums but increase them every year. The way you can avoid this if you regularly get quotes every year or two.
  • If your mortgage lender recommends an insurer, do not feel inclined that you have to use them. You should find the best policy which suits your budget.
  • Make sure that the insurer is legally authorized by the FSA to operate.


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