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Home insurance guide

Finding the best insurance policy to protect your home and its contents might just turn out to be one of the best things you ever did.

Words by: Nic Hopkirk

Senior Editor

Unlike the property market, home insurance doesn’t tend to make the cut as a dinner party conversation piece. In fact, it's a subject we rarely even give any thought to.

Yet, as your home and the things in it probably add up to almost everything you own, spending some time getting the right cover in place could be the best thing you ever did. Start with our simple home insurance guide.

What is home insurance?

Home insurance (or house insurance) is the collective term used to refer to two kinds of cover – buildings insurance and contents insurance.

As their names suggest, buildings insurance protects the structure of your home and contents insurance protects what’s in it.

Although they are often purchased together as ‘home insurance’, buildings and contents insurance are officially two separate kinds of policy.

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What does home insurance cover?

Buildings insurance covers the bricks, mortar and windows of your home as well as any permanent fixtures and fittings, such as bathroom suites and kitchens.

It also covers any outhouses or garages. You can claim on your buildings insurance if the structure of your home is damaged, such as by fire, storms, a break-in, a fallen tree, subsidence – where the ground under your home swells – and flooding or escape of water.

Contents insurance covers anything that’s not fixed in your home – basically what would fall out if you could pick it up and turn it upside down.

It covers things like furniture, TVs, electronic devices and computer equipment, as well as kitchen utensils, pianos and rugs.

You can claim on your contents insurance if any of your belongings were to be damaged, stolen or lost.

When do I need house insurance?

Unlike car insurance, neither buildings nor content insurance is actually a legal requirement.

However, if you are buying your home with a mortgage, the lender will want to see that adequate buildings cover is in place – although you are not obliged to buy the policy from your mortgage provider.

Buildings cover will also have to be arranged at exchange of contracts - as that’s when the bricks and mortar becomes your responsibility - rather than at completion.

Even if you own your home outright with no mortgage, it's still important to get buildings cover.

Most people could not afford to rebuild their house and buy all their possessions again if they were to lose it all in a fire, for example.

If you are renting however, buying buildings insurance falls to the landlord. And if you live in a leasehold property, it may come as part of your service charge – but always check.

Contents insurance is not essential but it’s a good idea for pretty much everyone – whether you are living in student halls, a room in a flat share, renting a house or you’re the owner of a country pile.

You might not think you own much but – as we’ll explain further down this guide – replacing everything can cost a small fortune.

How much home insurance do I need?

The amount of cover you will need for buildings and contents is worked out differently. And each will depend on your circumstances.

Buildings insurance: You will need to insure for the cost of rebuilding your home from scratch.

This is not the same as how much your home would sell for because this figure also incorporates the land it stands on – and the value of that, of course, depends on where it’s situated.

If your house or flat is built from standard bricks, the official rebuild cost calculator from the Association of British Insurers (ABI) will give you an accurate rebuild value.

But if you live in a listed property or your home has special architectural or material features, you will need to contact a chartered surveyor for advice.

Contents insurance: Getting the right cover for home insurance – which is known as the ‘sum insured’ – is a little more complicated. It can be done in one of three ways:

  • Opt for a set amount from the insurer: This is where the insurer will give you a choice of blanket cover amounts say, £50,000, £75,000 or £100,000. 

  • Go bedroom-rated: This is where you will be offered an amount of cover per bedroom. What this cover value is will vary according to your postcode but a typical scenario would be £20,000 for one bedroom and £50,000 for three.

  • Get unlimited cover: If your home is big or you have lots of valuables, you are likely to be better opting for ‘unlimited cover’ which is offered by some insurers. Of course, this generosity will be reflected in a higher quoted premium.

Single items limits and other extras

No matter which one of these three options you plump for, your insurer will still apply ‘single item’ – or ‘single article’ limits. This is the maximum sum a policy will pay out for any single item no matter what it’s actually worth.

Single item limits vary between insurers but between £1,500 or £2,000 is typical.

If you own anything that exceeds this limit – a diamond engagement ring or computer for example – you will need to call the insurer and get it recorded separately on your policy documents.

Make sure you keep updating the policy if you buy anything over this value in the future too.

Other extras to consider on your home contents policy include ‘items carried outside of the home’.

Most insurers cover this but only up to a given limit – usually around 10% of the total value of the sum insured. If you require more cover than this for a particular item, it will need to be added separately to the policy.

Check also if you will need to be with the item in person when it’s lost damaged or stolen to qualify for a claim.

Accidental damage – anything from red wine spills or putting your foot through the landing ceiling – doesn’t come as part of a standard home contents policy either.

You will have to buy it as a bolt-on to your basic cover or as part of a premium home insurance package. As you might expect, extras like these will push up the cost.

Watch out for the ‘average’ clause’: If you’ve got £40,000 of contents but only insure for £30,000, you’ve only bought 75% of the cover you need.

In this case, the insurer is within its rights only to pay 75% of any claim you make – so a £10,000 claim would only get a £7,500 payout.

How much is home insurance?

The cost of any kind of insurance is based on risk – and it’s no different for buildings and contents insurance.

One of the main pricing factors is the postcode area you live in, which is an indicator of how likely you are to be burgled or flooded.

But the insurer will also look at how secure your home is, for example, does it have a five-lever mortise lock on the front door and double-glazed windows?

A burglar alarm, security lighting and even being part of a Neighbourhood Watch scheme can also lower your premiums.

Your own circumstances such as your age, what you do for a living and how often you are away from your home will also have an impact on your home insurance premiums, as well as if you’ve made any claims in the past five years.

Then of course, there’s how much insurance cover you are asking for and how comprehensive you want your policy to be.

How to find home insurance and keep costs down

The good news about home insurance is that there are several ways you can keep the cost of premiums down, without compromising on your level of cover. Here are some easy ones:

  • Shop around: the cost of home insurance policies – even if they are like-for-like – varies between insurance companies. So make sure you shop around on a comparison website such as uSwitch to get the cheapest deal.

  • Buy online: buying your home and contents online can usually shave about 10% off the cost of your annual premium. Buying buildings and contents insurance from the same insurer can also lead to a similar discount – and could also be useful if you ever need to claim on both at once.

  • Pay annually: home insurance premiums are quoted annually but all insurers give you the option to spread the cost over monthly instalments instead. However, as this constitutes ‘credit’ it usually comes with a premium, so will end up costing you more overall. Pay upfront if you can.

  • Increase your excess: the excess is the amount you will have to stump in the event of any claim. If you volunteer to increase this, say from £200 to £500, the cost of your premium will come down.

  • Build up your no-claims discount: the longer you don’t make a claim, the bigger No Claims Discount (NCD) you can build up. One year's NCD can result in a reduction of around 30%, while savings of up to 70% are available after five years.

  • Make sure you don’t double up on cover: gadget insurance comes as part of some packaged current accounts, so make sure you aren't paying for two lots of cover for your tablet or smart phone.

Compare quotes on home insurance with USwitch.

We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zoopla Property Group accepts no responsibility or liability for any decisions you make based on the information provided.