Home insurance – do you really need it?

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What is home insurance?

Home insurance protects you from the cost of damage to your home and/or the things inside it. You can get insurance by agreeing to a contract – called a policy – with an insurance provider. You’ll need to pay them a regular fee, called an insurance premium.

Here’s an example of how home insurance can work: say a pipe bursts and floods your bathroom. You may be able to make a claim, meaning the insurance provider pays most of the cost of fixing the damage.

There are two main types of home insurance: buildings insurance and contents insurance.

Buildings insurance and contents insurance – what’s the difference?

Buildings insurance is designed for property owners. It covers you if the structure of your property is damaged. This may include things like the walls, ceilings, floors and roof. Some policies also cover fixtures, fittings, garages and driveways.

Contents insurance is designed for property owners and renters alike. It covers you if your belongings are stolen, lost or damaged. This may include things like furniture, electronics and jewellery – anything in your home that isn’t physically attached to the building. Contents insurance can also cover you if someone is injured or dies while visiting your home.

You can buy buildings and contents insurance separately, or together under a combined policy. We explore both types in more detail below – including whether you need them and when you may be able to make a claim.

Do I need buildings insurance?

Buildings insurance isn't a legal requirement, but it's often required by your mortgage provider.

When can I claim on building insurance?

Floor creaking? Roof leaking? Your buildings insurance provider may pay out depending on how the damage happened. It’s common for building insurance to cover damage caused by:

  • Vandalism

  • Subsidence (this is when the ground under your home collapses or sinks, taking the building's foundations with it)

  • Falling trees

  • Fire, smoke and explosions

  • Vehicle collisions with the building

  • Water and oil leaks

  • Natural events, such as lightning and high winds

It's uncommon for buildings insurance to cover:

  • General wear and tear (e.g. scuffs and scrapes)

  • Leaking gutters

  • Insect infestations

  • Frost (unless it causes water damage by bursting a pipe)

  • Damage when your property has been empty for over 30 or 60 days

  • Damage that happened because you didn’t maintain the house properly

  • Damage caused by war or terrorism

Do I need contents insurance?

It’s up to you whether you want contents insurance. It’s usually better to be safe than sorry – but every person’s situation is different. So here are some things you may want to consider:

Whether you’re already covered. Some policies cover every member of the family, even if you’ve taken your stuff away to university for example.

The likelihood of your stuff being damaged, lost or stolen. For example, do you live in an area with high crime rates?

How you’d cope without your belongings. Imagine if you were burgled or there was a fire. Could you afford to replace everything?

You responsibilities as a renter. If your house contains things belonging to your landlord, you may have to replace them if they get damaged or stolen.

What you want to insure. It may be worth looking into specialist insurance if you only want to insure a few valuables, such as your mobile phone.

The cost of contents insurance. Can you afford it? Are there other expenses you should budget for first? The premium is affected by the level of cover you choose, among other things – we look at this in more detail below

When can I claim on contents insurance?

You’re normally covered if your belongings are damaged or lost because of theft, fire or flood. Many policies offer new for old cover, meaning they help you replace the item with a new version. But some policies only pay out what your items are currently worth.

You normally have to pay extra to cover things like:

  • Accidental damage or loss

  • Taking items outside your home or abroad

  • Digital downloads

  • Higher limits for valuables (many policies restrict payouts to a maximum of £1,500 for single items and £12,000 for all your valuables put together)

It’s uncommon to get a payout for:

  • Wear and tear (such as worn carpets)

  • Anything physically attached to your home (this comes under buildings insurance)

  • Damage to a device or digital content that was caused by a virus

How much does home insurance cost?

These are the average home insurance premiums, according to the AA British Insurance Premium Index in 2018:

  • Buildings insurance – £118.67 per year (£9.89 per month)

  • Contents insurance – £59.22 per year (£4.94 per month)

  • Combined – £161.87 per year (£13.49 per month)

Of course, the premium you’re offered may differ. It may depend on a number of things, such as:

Number of rooms or total value of your home/belongings – depending on whether it's a bedroom-rated policy or sum-insured policy.

Level of cover – for example, you might want extra cover for accidental damage.

Where you live – e.g. premiums may be higher in areas where lots of claims have been made or where there’s a high risk of flooding.

Whether you’ve claimed before – insurance is often cheaper if you haven’t made any recent claims (this is called a no claims bonus).

Building materials – e.g. your policy may be more expensive if your home has wooden features, since there may be a greater risk of fire damage.

The insurance market – e.g. changes to insurance premium tax or the number of claims being made.

You should also take into account the policy’s excess. This means you have to pay a certain amount of any claim. For example, if you claim £1,000 to replace a damaged sofa, you may have to chip in the first £50.

Are there any other types of insurance you want to know more about? Tell us below!