Owning a home is a wonderful thing, but it comes with the risk of theft and property damage. To cover such issues, you will need to take out home insurance. This type of property insurance also provides liability coverage in case of accidents in the house. You should note that home insurance is not the same as mortgage insurance or home warranty. In this guide, we will learn about the importance of home insurance.
What Insurance do You Need for Your Home?
One type of insurance you need for your home is buildings insurance. This will cover the cost of repairing the structure of your building, and you can also claim it for damages to the sheds, garages, and fences. Items like pipes, cables, and drains are also included in this policy. If you need to rebuild the property, buildings insurance will be able to cover the full cost of the construction. In addition, the company will pay for demolition, architect’s fees, and site clearance. You can make claims when the house is damaged by:
- Theft and vandalism
- Fires and natural disasters
- Damaged pipes
- Collisions of vehicles and aircraft
Mortgage companies require homeowners to take out buildings insurance before the loans can be processed. You should still consider taking out buildings insurance even if you don’t need a mortgage. Repairing or rebuilding your home can be extremely costly and can significantly affect your finances.
The other type of insurance you need is contents insurance. You can purchase this policy as a landlord or tenant, and it will protect you against losses resulting from the damage or theft of your belongings. It may not cover items of people who are staying with you temporarily, but it usually covers the possessions of close family members living with you. Contents insurance doesn’t always cover accidental damage or loss, but you can pay an extra fee for this option. If you have children or pets, you should consider buying a policy that covers accidents.
Home insurance policies may vary slightly, but they can all be split into contents insurance and buildings insurance. Combined home insurance refers to policies that include both contents insurance and buildings insurance.
As a landlord, you should consider purchasing landlord insurance. This policy usually includes different options, including buildings insurance, contents insurance, accidental damage to the property, and rent guarantee. It will also cover things like alternative accommodation and public liability. Landlord insurance is similar to home insurance, but it is tailored to meet the needs of landlords. The UK government doesn’t require landlords to buy this policy, but your mortgage provider may insist that you purchase it. Generally, it would be a good idea to use this insurance since landlords don’t always know what is really going on at their properties.
Students renting out hostels can choose students insurance instead of tenants or contents insurance. This policy will protect belongings you are likely to have in school, including laptops and smartphones. It can be extremely useful since students usually need to travel to see their families.
Listed buildings can be expensive to repair as these processes are controlled by the UK government. This is because such buildings have historical and cultural significance. If you happen to live in a listed building, you should take out listed buildings insurance. This will cover the building and contents of the house. It is worth noting that listed buildings have three different grades, and at the highest listed building grade I, you may even be legally required to conduct repairs. Therefore, the insurance policy will come in handy.
Insurance companies also offer high-value home insurance or high-net-worth home insurance. Again, this cover is split into buildings insurance and contents insurance. You can purchase this policy if you live in a building that costs £500,000 or more to rebuild. The definition of high-value homes can vary slightly dependent on the insurer you choose to work with. It is worth noting that these policies have a value limit for individual items, so you won’t always get the full amount for the items.
Other types of home insurance policies you can choose include non-standard construction insurance, holiday home insurance, and unoccupied home insurance. You should try to select sufficient cover without being over- or under-insured.
What is a New Build Warranty?
A new build warranty is a type of home insurance that is taken out on new properties. The policy runs for ten years and protects the builder and property owners against major structural damages to the building. New build warranties are designed for property developers, contractors, and builders. It is important to note that mortgage lenders always require homeowners to purchase new build warranties before they apply for the loans.
This warranty is usually split into two periods. In the first two years, the builder will work on any repairs that need to be done on the house. For the next eight years, the insurance company will cover the full cost of the repairs. In case the builder fails to honour the terms of the new build warranty, you can approach the insurance company, and they will settle the issue quickly.
What Else Can You Get With Home Insurance?
Home insurance plans can give you a number of extra benefits and features. One of these features is legal protection, where you can obtain coverage for legal issues related to the property. Some of these issues include inheritance, conveyancing, probate, and disputes with neighbours.
The insurance plan can also cover home emergencies such as surprise bills and damaged locks or keys. If you often travel with valuable items like laptops and mobile phones, you can obtain a home insurance plan that covers such items when you are out and about.
If you have a bike, you can choose a plan that also covers your wheels. In this case, you would get compensated if the bike is stolen or damaged in an accident. You will have to protect your bike adequately for this insurance policy to pay out.
What is Not Covered Under Home Insurance?
Home insurance policies have several exclusions. First, you should ensure that you always supply accurate information when taking out the policy. If you are not entirely honest about crucial details, the company may fail to pay for repairs or reconstruction. You should also maintain the property adequately, and you can work with your builder when maintaining the building. Many home insurance policies don’t cover unoccupied properties, so you should disclose this information when making the application. Also, note that these plans will not pay for day-to-day wear and tear of the property.
How Much Does Home Insurance Cost?
The cost of home insurance varies depending on a number of factors. These include the value of the building, its contents, your location, and your claims history. All these factors can determine the chances that you will make a successful claim, and they will also affect the amount you would need for repairs or reconstruction.=
How Can You Get Cheaper Home Insurance Quotes?
You can minimise your home insurance premiums by building up your no-claims discount, and this requires you to go a few years without making a claim. You will also save money if you make the payment annually instead of monthly.
Another way of lowering your home insurance premiums is by improving your home security. You can do this by purchasing a burglar alarm, adding secure doors and window locks, and using a safe. Paying attention to home security will significantly lower your premiums if you live in a burglary hotspot.
If you are likely to experience flooding in your area, flood protection doors for your home will help protect against flood risk and be beneficial when seeking insurance and making a claim.
Insurers will give you better rates if you keep the home occupied most of the time. This will help to lower the risk of burglary and property damage from fires and water.
Conclusion
Home insurance is crucial for homeowners as it covers the cost of repairs or reconstruction in the building. Covering these costs out of pocket can be extremely stressful as it can be very expensive. It is also worth noting that home insurance is required by mortgage providers in the UK. Home insurance includes buildings insurance and contents insurance, but it is often packaged as combined insurance. Some types of home insurance include landlord insurance, high-value home insurance, listed buildings insurance, and students insurance.
The cost of home insurance will depend on the location of the building, your claims history, the value of the property, home protection mechanisms and the value of the contents of the building. You can get better rates by building up your no-claims discount and making payments annually instead of monthly. Improving your home security will also significantly lower your premiums.
