Home insurance

How does it work

Building Insurance

Building 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; They range from theft or attempted theft to riot, civil commotion and impact by aircraft; And they range from falling tree branches to subsidence, landslip or even earthquake.

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 how much items such as jewellery or electrical goods are worth, 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 antiques 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 extras available:

• 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 optional extra 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.

The key points

Calculating the value of your possessions

Try to accurately estimate the value of your possessions, otherwise you risk under - or over insuring. If you under-insure an item you will normally get a reduced payout on your claim. Over insure and you will needlessly increase the price of your insurance cover. .

Getting the right excess level

The excess is the amount of each claim you have to pay yourself. The higher the excess the lower the premium. For some cover, such as subsidence, the excess could be as high as £1,000 - £5,000 depending upon the insurer, so make sure you read the terms and conditions.

Extended absence from your home

Remember to tell your insurer if you are going to be away from home for more than a month and be prepared to have to pay a small extra premium for an extended absence with some insurers. Most insurers won't cover your property if you are away from home for more than 30 consecutive days at a time, unless you inform them in advance and pay any additional premium required. 

Home security

A burglar alarm, extra security fittings and membership of Neighbourhood Watch may give you a discount on your premium.

No Claim Discount Protection

Your No Claim Discount can be protected for a small extra premium by buying 'no claim discount protection'. This will maintain your No Claim Discount status, even if you have to make a claim.

Glossary

Arranging insurance for your home may involve a number of unfamiliar words and phrases. Here's a quick guide to some of the most common ones.

As new

An insurance policy that will replace the items it covers with new ones. Also called "new for old".

Buildings insurance

Cover for the bricks and mortar plus fixtures and fittings of your home.

Claim

The formal application you make to your insurer for payment under your policy.

Contents insurance

Everything in your house that can be taken away when you move, including personal possessions.

Cover

The items your insurance policy protects and the risks it protects them from.

Excess

The part of an insurance claim that you have to pay.

Exclusions

Items or risks that are not covered by your insurance policy. The policy will explain what these are.

Home insurance

The term covers both buildings and contents insurance.

Household insurance

Another name for home insurance.

Indemnity policy

Under an indemnity policy, the amount the insurance company pays out is reduced to account for the age of items - the wear and tear on them, and their reduction in value over time.

Insurance schedule

The insurance schedule is a document that gives details of the cover you have and information that you have supplied to your insurer.

Insured

The person whose home is insured, also called the policyholder.

Insured perils

These are the events that the insurer provides cover for under the terms of the policy, such as fire, theft, flood or storm.

Insurer

The organisation that issues the insurance policy and pays any claims in exchange for an insurance premium.

Liability

Legal responsibility if someone is hurt or their property is damaged as a result of your property.

Liability insurance

Personal protection against prosecution for any unintentional injury or damage that you accidentally cause to someone else or their property through negligence.

Limit

The maximum amount you can receive for a given item in case of loss. All insurance policies include their own specific limits.

Loss

Any event causing damage.

Policy

The document setting out the legal rights and obligations of you and your insurer.

Policyholder

The person who has taken out an insurance policy.

Premium

The amount you pay for your insurance.

Sum insured

The maximum amount you could be paid under your policy.

Useful Links

Here are some useful links we find helpful and thought you might feel the same.

• http://www.abi.org.uk - The Association Of British Insurers (ABI) Represents the collective interests of the UK's insurance industry.

• http://www.environment-agency.gov.uk - This government site informs you how to prepare your home for floods.

• http://www.crimereduction.homeoffice.gov.uk - Government site designed to give fully comprehensive advice on securing your home.

• http://campaigns.direct.gov.uk/firekills - Tips on fire safety including where to fit your smoke alarms.