Home insurance for the building is something you can’t be without if you have a mortgage, but contents insurance is an expense we often feel we can do without. If you live in an area with a low crime rate or don’t have many “expensive” things in your home, you likely put off getting home insurance for another day. But is that the right thing to do?
Since you’re here, it’s likely that there’s something in your head nudging you to make a better decision. If you still feel on the fence about getting home insurance, keep reading.
Why do you need home insurance?
A lot of people don’t believe they need home insurance because they don’t believe they’ll get burgled or encounter a home disaster, and it can seem like just another monthly expense you don’t need. The biggest problem is that, while home insurance is just like car insurance – protecting you if the worst happens, the risks don’t seem as obvious. We experience hairy moments all the time when we drive, but at home, we feel relaxed and like nothing can go wrong.
Here in the UK, we’re lucky to avoid the majority of natural disasters that impact so many others around the world, such as forest fires, earthquakes, tornadoes, and flooding, but that doesn’t mean they can’t happen. It’s important to consider not only what that damage could do to the structure of your home, but also your possessions inside.
Imagine that your house burned down and you lost all of your things – besides the emotional turmoil of losing possessions you loved, think about how much it would cost to replace everything in your home. Insurance provider Admiral asked 1,000 people what they believed the value of the contents of their home was, and the average figure was a little over £18,000. That’s almost 50% of what it would realistically cost to replace everything in their home, which is estimated at £35,000. Unless you have at least £20,000 put away in savings to buy all-new second-hand furniture should the worst happen, then you need home insurance.
What does home insurance cover?
There are two different times of insurance that come under the umbrella of “home insurance”, this is buildings insurance and contents insurance.
If you have a mortgage, then you’re legally obligated to maintain buildings insurance so you can protect your asset (and, at this time, the bank’s asset) from natural disasters and other accidents. Buildings insurance protects the building itself. If you rent or own a leasehold property, building’s insurance is not your responsibility.
If you are lucky enough to own your home outright and don’t yet have buildings insurance, get a policy in place as soon as possible. Your home is your biggest asset, not only in monetary value but it’s also a place you can live cost-free – don’t risk financial freedom by not putting a buildings insurance policy in place. As we will discuss shortly, the cost is minuscule compared to the hundreds of thousands it costs to rebuild a home.
Buildings insurance typically covers natural disasters (fire, wind, hail, flooding, smoke damage), other disasters (explosion and fire), and criminal activity. Should anything happen to damage the roof, walls, floors, fixtures, fittings, and structural integrity of your home, your buildings insurance will cover it.
Contents insurance is a type of home insurance everyone needs, no matter where they live or who owns the building. This type of home insurance protects your belongings within the home, so if anything should happen to them, you can claim on your insurance policy to get them replaced.
Contents insurance typically covers things like your TVs, computers and laptops, jewellery, art, appliances, and so on.
It’s important to note, however, that often specialist equipment and high-value possessions will not often be covered by a standard policy, so if you keep valuable jewellery at home or expensive sporting or photography equipment, get a specialist policy for those items. This is one of the reasons why it’s so much easier to get on the phone to arrange your home insurance, so you can be crystal clear about what is and isn’t covered.
Can I just have buildings insurance?
You can, but does it really make sense to protect one aspect of your home, but not the other? Imagine that a fire breaks out and you have to get your kitchen and a section of the roof replaced. A good buildings insurance policy will ensure that everything is repaired to a high standard and will likely pay for alternative accommodation for you and your family for the duration of the repairs.
But what it won’t do is pay for the extensive smoke damage and water damage from the firefighters that will essentially wipe out all your possessions, including your clothes. Why would you protect your building but leave yourself out in the cold when it comes to the possessions that make a house a home? The best thing to do is protect both your building and contents, or just your contents if you are not responsible for the upkeep of the building.
How much does home insurance cost?
As always, this is the how-long-is-a-piece-of-string question! It totally depends on what you choose to cover, any extras you want, and the size of your home. If you live in a small two-bedroom bungalow and don’t keep any expensive assets at home, you may pay as little as £70 a year for your contents insurance. However, the average cost is around £200 a year for buildings and contents insurance.
What’s the best way to get home insurance?
You can go online and buy a policy as quickly as you can buy car insurance, but you need to be wary of doing so if you have anything in your home which requires special note. You need to remember that your insurance company will only give you an average value for something unless you note that what you own is worth more. For example, they may offer £800 to replace your sofa, but if your sofa was worth £3,500, that’s likely not going to be a satisfactory replacement. You don’t want to find a weak link in your insurance policy when you’re making a claim.
The best thing to do if you’re ready to get a home insurance policy in place and experience the peace of mind that comes with a home insurance policy (or if you need to review a policy you’ve already got in place you are now concerned may be inadequate) is to contact our team of impartial, expert advisers. We can help you review any existing policy or help you purchase the right insurance policy for you. We’ll help you get the best price while ensuring all of your assets are sufficiently covered. To review your policy or get a policy at a great price with our team, click here.