Home Insurance - the basics

Home insurance (sometimes called household insurance) is usually made up of two separate policies, one for buildings and one for contents. You can buy both from the same insurance company or get them from two different insurers, although this can lead to claims being more complicated to resolve.

Buildings insurance

Buildings insurance covers you for damage caused to the structure of your home and any non-moveable items such as fixtures and fittings including fitted kitchens, bathrooms and decoration.  You are free to take this insurance from a different insurer to your mortgage provider.  The 'sum insured' needs to cover the cost of rebuilding your property and should not be confused with the market value of your home.  Most insurers can provide guidance on rebuild costs and the ABI has a guide to rebuilding costs on their website.

Types of risk typically covered in a buildings policy

You should always check the detail so you understand fully what your policy does and does not cover.  The typical risks that are covered range from events like fire, explosion and lightning to flood and escape of water from tanks or pipes.  Policies do vary so check to understand what your policy does cover.

Contents insurance

Contents insurance covers just about everything you would want to take with you if you moved house, it covers items inside your home such as your furniture, electrical appliances, and personal possessions.  Often insurers will ask you to specify items such as jewellery or electrical goods and this can affect the price of your insurance cover.  There are usually limits as to how much insurers will pay out for some high value items such as works of art or jewellery and they may need specialist insurance cover.  You may also need to provide your insurer with an up to date valuation on expensive items such as jewellery.

What else does contents insurance cover?

There are typically three optional additions to basic cover.

• The first option is accidental damage to cover most of the contents inside your home against accidental damage or breakage. Many specific items in your home, such as computers, televisions, DVD players, audio equipment, mirrors and ceramic hobs, should already be covered automatically as part of your standard contents policy.
• The second is accidental loss or damage cover for personal possessions you take out of the home with you. Personal possessions are those things that you typically wear or carry with you, such as clothes, jewellery, cameras, mobile phones and MP3 players. There is usually a limit on personal possessions cover and often a limit for any one item so you will need to check the details of your policy for details of those limits. Particularly valuable items or items that are particularly likely to get stolen when outside the home may only be covered if they are individually listed on your policy, this might apply to items like bikes or laptops.
• The third type of additional cover typically available is called legal expenses. Legal expenses insurance usually provides access to legal advice, and cover for the legal costs of pursuing a claim for compensation after an accident that was not your fault or pursuing or defending specified actions.