If home insurance is unchartered territory for you – or even if you’re several policy renewals down the line – these top tips can help you navigate the home insurance market with confidence, and find the most suitable policies and premiums for you.
1. Understand the difference between ‘buildings’ and ‘contents’ insurance
One of the first things you’re likely to need to know is the distinction between buildings insurance and contents insurance – and whether you’re going to require one or both of them.
They both offer protection against risks such as fire, theft, malicious damage, flood, escape of water, subsidence and accidental damage. However, the former focuses on the structure of the building, its fitted fixtures and outbuildings. The latter is concerned with the movable items contained inside, such as furniture.
If you’re a homeowner, buildings insurance is likely to be a condition of your mortgage so you’ll definitely need it; but even if you own the property outright, protecting your investment and liability is imperative. If you’re a rental tenant, on the other hand, then you won’t need this cover – it’s your landlord’s responsibility to insure the building itself.
Contents insurance is optional but highly recommended for all homeowners and rental tenants, to protect against loss or damage to your belongings if, for instance, your house is burgled or flooded by a burst pipe. If you’re a landlord you’ll only need this cover if your rental property is furnished or contains items belonging to you that are not already covered by your buildings insurance policy.
Read more: Landlord insurance vs home insurance
2. Compare more than just premiums
When comparing policies, it’s tempting to focus only on the annual premiums offered by home insurance providers and to simply go for the cheapest option. But there are other factors that should also be taken into consideration.
“Be sure to compare policy wordings and excesses too,” says Personal Lines Director Heath Alexander-Bew. “Sometimes premiums may appear cheaper, but they may come with higher-than-normal policy excesses, or the cover being offered won’t be exactly the same – for example, some covers may not automatically be included but can be added for an additional cost.”
3. Get your sums right
Accuracy is key when it comes to sums insured, as being under-insured could cost you a lot more in the event of a claim than the money you might save on your premium.
“To help avoid being under-insured you could select a policy that offers a blanket sum insured for both buildings and contents,” suggests Heath. “Some policies will cover your buildings up to £1m and contents up to £75k, which in most cases would be more than adequate for the average family. The premium is calculated either based on the number of bedrooms or an average rebuilding cost of similar properties in your area, and not based on the actual sum insured.”
Otherwise, you could try using an online rebuild cost calculator (offered by the Building Cost Information Service) and/or home contents calculator (available on many comparison and insurers’ websites) to make sure you get the right level of cover for your home.
4. Don’t forget belongings kept outside your home
Cover for contents kept in garages and sheds will vary from insurer to insurer, so be sure to choose a policy that gives you adequate protection for your needs. “Generally speaking, the limit for theft from a shed might be between £2-5k, whereas a brick-built garage might be £5k or up to the contents sum insured,” says Heath.
Bicycles need particular attention when it comes to insurance as they are used away from the home. “With the cost of pedal cycles and road bikes sometimes exceeding £1,000, it’s important that you get the right cover,” adds Heath. “Pedal cycles and their values may need to be specified or they may be covered automatically under the unspecified personal possessions section of your contents policy up to £500 each, so you’ll need to make sure you understand what your policy is providing.”
5. Check the excesses
Excesses are the amounts you are required to pay towards claims, if you make them. Most are compulsory, set by the insurer, but you may be able to set additional voluntary excesses in exchange for a cheaper premium.
It’s important to check the excesses before committing to a policy, to ensure they are affordable for you. “The standard policy excess could be £50 or £100, but there may be an increased excess for escape of water of £250 or more, and £1,000 for subsidence,” Heath explains.
Read more: The insurance claims process explained
6. Protect the valuables that travel
Once they leave your home, personal possessions such as jewellery, watches, mobile phones and tablets are not always covered under a standard contents insurance policy, so you may need to consider an optional ‘add-on’ to your policy if you want to fully protect the higher-value belongings that you carry or wear each day.
“Often, you can select a sum insured for your exposure at any one time for items away from the home, without necessarily having to specify every item. Usually, a policy will have a £1,500 or £2,500 single article limit before an item needs to be specified,” Heath points out.
7. High-value property may need special cover
If you have higher-than-average sums insured – upwards of around £75k for contents and £500k for buildings – you’ll probably need to investigate other types of home insurance that are more suited to your lifestyle.
“Typically, these policies – which are known in the insurance industry as mid- or high-net-worth – will split valuables such as gold, silver and works of art etc into separate categories on your policy schedule, showing their total sums insured. These will have higher-than-normal single article limits before items need to be specified, compared to a standard home policy,” Heath explains.
These policies will usually cover your contents anywhere in the world, and they are often warranty-free – meaning no penalties will be incurred if you forgot to set your alarm when you popped out to the shops. Home emergency cover may be automatically included too, with options available to include legal expenses, annual travel insurance and second/holiday homes. Insurers also tend to accept high values of building works to be carried out, subject to certain terms and conditions.
“While these policies are available directly from an insurer, it’s best to use an independent insurance broker to help source an appropriate policy for your needs,” Heath advises.
8. Choose the right level of accidental damage cover
Be careful not to confuse ‘standard’ accidental damage cover with ‘full’ accidental damage cover. “Standard accidental damage will cover things like accidental breakage of sanitary ware and fixed glass, but not carpets,” warns Heath. “Full accidental damage cover is optional and comes at an additional cost.”
Full accidental damage cover is optional and comes at an additional cost
9. Add-ons are always worth considering
When arranging home insurance you may be offered a selection of optional extras, such as full accidental damage cover mentioned above. These can be added onto your buildings or contents policy at an extra cost.
For instance, Home Emergency provides cover for complete failure of your heating system or electrical breakdown; Family Legal Protection provides access to a 24-hour legal advice line and covers costs for a limited number of legal matters, often up to £50k or £100k; Key Cover protects against loss or theft of your home or car keys; and Excess Protection reimburses you for any excess paid or deducted following a material damage claim.
Depending on your circumstances, these add-ons can prove invaluable, so it’s worth giving them proper consideration. “Some are offered by the same insurer, but often the additional covers will be provided by a different party,” Heath adds.
Read more: What is insurance excess cover?
10. Some policy jargon is standard
It’s important to read and make sure you’re happy with all of the details, terms, conditions and small print associated with your chosen policy before committing to buy. However, some exclusions are pretty much unavoidable. ‘Wear and tear’, ‘gradually operating cause’, ‘faulty workmanship’, ‘wet and dry rot’, ‘rising damp’, ‘electrical or mechanical breakdown’, ‘vermin’, and ‘if the property hasn’t been well maintained’ tend to be standard exclusions across all home insurance policies, so you’ll just have to grin and bear them.
Still confused? Don’t panic! There are plenty of experts who can help. “If you would like advice regarding the most suitable cover, speak to an independent insurance broker who specialises in home insurance and can tailor the right policy for you,” Heath reassures.