Do you really need Buildings and Contents insurance?
‘Home is where the heart is’ they say. We love our homes and the effort that we put into them to make them as comfortable and welcoming as we can. We love our treasured possessions which we have built up over the time we have spent there. It is natural for us to want to protect our home and make sure that it stands strong over time.
This is very true for people who have unfortunately been in the position of losing a lot or all of their possessions in natural disasters or due to unforeseen accidents. People can be left devastated without the money to pay for replacement furniture or the means to re-build their home.
So how can we protect our home and possessions to ensure that if the worst should happen that we can re-build our lives as easily as possible? The simplest thing to do is to take out insurances that will do the job
The two insurances to think about are Buildings and Contents insurances. You can either buy them separately or combine them in one policy which is the most common way to buy them if you are a home owner.
Buildings Insurance
This insurance is specifically for the structure of your home itself. It will provide you with the funds to cover the cost of repairing or rebuilding your home in the event that it is damaged or even destroyed. It can include any outbuildings on your land as well including sheds and garages, however these are usually added extras, so you need to check the details of your policy before you buy.
The standard events that will be covered are: flooding, subsidence, theft, vandalism, fire and lightening or water damage.
The important thing to consider when you are taking out your insurance is to make sure that you cover your home for its re-build value, not the value it would be if you sold it.
Mortgage providers usually ensure that you take this cover out as it means they will recover their money if the house is lost. It is a form of security for the loan that they have given to you.
Landlords and renting
It is essential for Landlords to take out buildings insurance to make sure that they can recoup their losses. If you are renting a property this is the responsibility of your landlord.
Contents Insurance
This covers the loss of your possessions, including furniture, books, photos, clothing etc if they end up being destroyed or damaged. The standard cover will offer you protection against the same events as buildings insurance listed above.
Most people underestimate what they will need to cover everything. It is worth taking time going round your house and actually calculating what you have and how much each item would cost you to replace it, not how much you bought it for. An average figure comes out at £55,000 for a 3 bedroom home according to the Association of British Insurers.
Also note that high value items may not be covered under the normal policy and unless you state them separately they will not be insured. These are normally items that are worth more than £1000 individually.
Be aware when you look at insurance policies that the cover you are getting will be enough to replace your items to the standard that you would like them. For example some policies offer what they call indemnity cover. This will take into account the cost of wear and tear and therefore you will only receive a portion of what you first paid for it. There are policies out there that will cover ‘new for old’, which means that you will get what you paid for it. These policies are more expensive than indemnity policies, so your monthly premiums will be higher.
Optional Extras
Check all policies before you buy. There are extras that you can add to your standard insurance that may help you in the future, such as accidental damage, home emergencies and legal cover. If you like doing DIY and have small children, these covers can be a godsend.
Landlords and renting
If you are renting a property that is not furnished, you will need to make sure that you take out contents insurance as your Landlord is not liable for this.
It is important that you shop around and that you work out exactly what you need before you compare. A financial planner can point you in the right direction especially if you are buying your home for the first time.