How do you protect your most important asset? With home insurance of course, but do you know what is actually covered, what you need to pay extra for or what type of home insurance is available? If your answer is no, don’t sweat, here’s a little comprehensive guide to better understand home insurance and what to look for.
What kind of home insurance options are out there? When it comes to home insurance in the UK there are three main types to familiarize yourself with. The first is buildings insurance and it covers exactly what it sounds like, the building that makes up your property, better known as the structure and includes things like walls, windows, bath and toilet amongst other permanent fixtures. Secondly, there is contents insurance which covers the contents in the home such as furnishings, stereos and drapery although there are certain personal belongings not covered under this category. Thirdly is combined insurance which covers both structure and contents.
Home insurance will cover you against theft and damage (fire, flooding, and explosions), but there are certain restrictions and different companies will have different restrictions. Some of these restrictions include fences, gates, loose roof tiles and movable property (garden furniture) during storms. Other restrictions include different scenarios such as subletting and when your home is unoccupied for more than 30 days, usually under both of these circumstances theft and damage will not be covered or you will need to pay extra to get coverage during these times. Also remember that when sets of furniture such as dining sets are damaged a lot of the time insurance companies will only cover the items damaged not the entire set. Finally, if you run a business out of your home you can run into liability issues if damages occur because of the business. Always make sure to discuss these specifications with your insurance company to make sure you have all the information and coverage you need to cover your most valuable possessions.
Make sure you discuss excess with your insurance provider and voluntary versus compulsory excess amounts. Excess is the amount you pay out of pocket before the company pays a claim. For example if your excess is £100 on a claim for £300.00 your insurance provider would pay the £200.00 left over after the excess. There are two types of excess compulsory and voluntary. Compulsory excess is the amount set by the insurers whereas voluntary excess is a higher amount set by the insuree. Insurance companies will sometimes give you a lower premium if you set a voluntary higher excess to payout on claims. This can be good for the lower premiums but can also mean that you have a higher out of pocket expense as well depending on how many claims you make.
When considering insurance you will also need to know about new-for-old cover, indemnity cover, sum-insured cover and bedroom-rated cover. New-for-old cover means that an insurance company will pay full cost of items whereas with indemnity cover the company will calculate wear and tear on an item and deduct that from the payout. New-for-old is usually more expensive but it means less out of pocket expenses. Sum-insured cover is when the insurer calculates the full rebuilding cost for a property (not market value) in contrast bedroom-rated cover is calculated based on the number of bedrooms a property has and usually has a maximum amount.
Lastly, ask insurance providers about the extras that may or may not be included with their policies. Home emergency cover (pests, bad wiring, broker boiler), legal expenses (disputed claim) and download insurance (covers digital content from stolen items such as laptops) are all extras that can be added to policies, some insurance companies may even add these as freebies.
Make sure you check to see what different home insurance policies offer and always read the fine print to understand what is and isn’t covered, after all your home is your most important asset.