There are two types of home insurance, buildings and contents insurance. If your house is made uninhabitable or needs to be rebuilt due to storm, flood or fire then your buildings insurance would cover your financial losses.
Most mortgage companies will require you to have buildings insurance because the money they lend you is safe so long as they can repossess your house if you are default on your payments. Different policies offer many different levels of cover, but as a general rule the cheaper policies tend to offer less financial protection by covering fewer expenses and offering lower maximum payments.
A basic buildings insurance policy ought to cover the structure of your home and should include permanent fixtures such as your bathroom suite and fitted kitchen. Outbuildings like garages, greenhouses and sheds are covered by most policies, but other outside items like plants, fences and boundary walls may not be.
You should make sure that your policy covers the cost of totally rebuilding your home, including any improvements you have made. Make sure that you inform your insurer if you make improvements to your home, for example the addition of a conservatory. Your buildings insurance will be based on the last known condition your home was in, and any sums paid out by the insurer will reflect that.
If the amount you receive does not cover your financial losses because you have under insured your home, can be an awful financial problem, so carefully consider the level of cover you need and be realistic about any excesses you are prepared to pay. Home insurance prices can vary significantly so do shop around.
A lot of home insurance providers offer discounts if you buy both your buildings and contents insurance from the same company. Contents insurance is for all the items that are not permanent fixtures in your home, such as white goods and furniture. The test is whether you would take the items with you when you moved, for example you would not take the wallpaper but you would take the curtains.
If your home is owned by a landlord, you are not responsible for buying buildings insurance, but do be aware that your own possessions will not be covered by your landlords buildings insurance policy. To insure your own belongings, you should take out a contents insurance policy. There are specialist policies for tenants and shared policy for people who share a rented home.
If your home is perceived to be high risk, for example due to a history of flooding, then your premium is likely to be higher and you may struggle to find an insurer. There are specialist buildings insurance companies who deal with high risk properties, so if your home is in that category you may need to look at their products and brace yourself for a bigger bill.
