Do I need home insurance?
You are under no legal obligation to have home insurance, but there are several reasons why you might need it:
- you are likely to have invested a considerable amount of money in your home and if it is destroyed – by a fire, explosion or impact from a runaway vehicle, for example, without home insurance you stand to lose it all;
- that goes not only for the building itself but for all your contents too; and
- if you are buying your home with the help of a mortgage, your lender is certain to insist that you maintain adequate home insurance at all times – as security against the balance remaining on your loan.
What are the main elements of home insurance?
Home insurance is typically used to describe two different types of cover: building insurance and contents insurance.
You may buy each of them separately, but it is invariably cheaper to buy the two together in a combined policy and enjoy the discounts offered by the majority of insurers.
A report by the Consumers’ Association’s Which? magazine in April 2018 found that combined policies are usually cheaper but also advised consumers to check that the buildings and contents components of your home insurance do not carry separate excesses – or you might end up paying twice if a claim is under both buildings and contents cover.
What does building insurance cover?
If you are a homeowner, this is probably the most critical element of your home insurance.
Just as the name says, it protects the structure and fabric of the building itself against such potentially disastrous loss or damage from fire, flooding, impacts (from vehicles or falling objects), escape of water, storm damage, vandalism and theft.
When deciding on the total building sum insured it is typical to anticipate a worst-case scenario in which the whole building is destroyed and needs to be reconstructed. The estimated cost of reconstruction – which is clearly different to the property’s current market value or what you paid for it – needs to be kept up to date and those costs may be informed by the reconstruction cost index maintained by the Royal Institute of Chartered Surveyors (RICS).
What does contents insurance cover?
Once again, this element of home insurance covers just what it says – all the contents of your home – and is suitable, therefore, for both homeowners and tenants.
To arrive at the sum which needs to be insured, this means conducting – and keeping up to date – a detailed inventory on a room by room basis of every item in your home.
Failure to include and value every item may leave you underinsured – with an inadequate settlement to repair or replace lost or damaged items in the event of a claim.
Where can I buy home insurance?
According to statistics published by the Association of British Insurers (ABI) on the 21st of February 2018, nearly 20 million households have some form of home insurance – so that is a vast number of policies issued by a wide variety of insurers.
If you prefer to exercise judgment rather than luck in choosing your provider, however, you might want to select a specialist broker, with a proven track record.