According to the government backed Money Advice Service, the average value of the contents of a home in the UK is some £45,000.
Through these two statistics alone, it is possible to see that there is a considerable investment represented in the value of the average British home and its contents. That investment may be safeguarded and protected by home insurance. Here is our home insurance guide.
Who might this product be suitable for?
As already suggested, home insurance is in practice typically split into two parts:
Building insurance – which protects the structure and fabric of the building; and
Contents insurance – which covers loss or damage to the contents of the building.
The two types of cover may be purchased entirely separately, although it is probably more common for homeowners to purchase the combination of both building and contents insurance in order to secure the discounts usually available.
If your property is mortgaged, then under the terms of your mortgage agreement with your lender, you are required to have buildings insurance to protect both your interest in the property.
Tenants and landlords
If you are a tenant rather than the homeowner, the landlord is typically responsible for arranging building insurance, whilst the onus is on you to arrange cover for your own possessions in the premises.
If you are the landlord of let property you typically require let property insurance rather than the home insurance reserved for owner occupiers, as the latter will not protect your investment against all possible risks.
What does it typically cover?
In common with many other forms of general insurance, there is a wide range of home insurance products available on the market, with each one tailored to meet the specific needs and circumstances of owner and tenant.
Building insurance, for instance, is designed to protect the structure and fabric of the property against such risks as fire, flooding, impacts, storm damage, and vandalism. Some policies also include subsidence cover as standard whilst others may charge an additional fee for this element of protection.
The risks are such that they may lead to the total loss of the building, which needs to be completely reconstructed. The total sum insured, therefore, needs to reflect this potential cost of rebuilding.
Another important element of building insurance is indemnity against your public liability as the property owner. If a visitor to your home or a passing member of the public suffers a personal injury or has his property damaged through some action or inaction on your part as the property owner, you may be held liable for negligence and face claims for a considerable sum in compensation.
Contents insurance offers protection of the contents against similar risks, although the greatest of these is likely to be theft and contents policies may or may not offer cover for accidental damage.When insuring the contents, you might want to avoid two of the most common failings:
under-insurance: failing to insure all of the contents to their full, current value, thus leaving a possible shortfall in the settlement of any claim for loss or damage; or
over-insurance: inflating the total sum insured, with the result that you are paying more in premiums than may be necessary.
Is there anything I need to know?
Amongst the more important points to keep in mind when it comes to home insurance are any areas specifically excluded from cover and the terms and conditions which might apply to particular types of claim:
with respect to building insurance, for instance, not all policies include the risk of subsidence – so if you suspect your home may be vulnerable, it is especially important to check the status of your cover; and
as far as contents insurance is concerned, there may be a considerable difference in your ability to recover the value of items lost or damaged depending on whether cover is on a “new for old” basis or the less favourable “wear and tear”.
The nation’s homes and their contents represent a considerable capital value and one which the prudent home owner or tenant might want to make sure is adequately safeguarded through home insurance.