Owning your own home is incredibly exciting. However, the journey of being a homeowner doesn’t always go to plan. And the last thing you need is something unexpectedly going wrong that leaves you trying to cover costs that you can’t afford.
Your home is likely to be the biggest purchase you’ll ever make, so it is sensible to protect it properly — this is where home insurance comes in. It gives you peace of mind that if your home is damaged by events out of your control, such as fire or theft, you can sort it out. For this reason, home insurance is a necessity, not a luxury.
With this in mind, we’ll cover all you need to know about home insurance. We’ll run through the different types of home insurance and what they cover, how much each type costs, and how to get a more competitive policy. Without further ado, let’s get started!
What is home insurance?
Home insurance is a specialist type of insurance policy that is designed to provide financial compensation and protection for your home and its contents in the event of theft, damage, or loss.
Although not a legal requirement, home insurance is a necessity — but not only because it protects your property and possessions. Nearly all mortgage brokers require you to have some form of home insurance before they will agree to a loan. Furthermore, many landlords will also require you to have tenant insurance. So regardless of whether you’re a homeowner, renter, or prospective buyer, it’s crucial that you have the right cover for your property.
Types of home insurance
Home insurance is an umbrella term that can be used to cover all types of home insurance. The three main types of home insurance are:
- Buildings insurance
- Contents insurance
- Buildings and contents insurance
Depending on the specific home insurance policy, they cover things like fire damage, theft, loss, weather damage, etc. To simplify things, we’ll break down each type of home insurance in the following sections.
This type of insurance covers your property in the event of structural damage to areas such as the walls, floors, roof, and also possibly fixtures and fittings. Building insurance usually also covers the cost of rebuilding your home in extreme circumstances where you may need to do so. This means that if your home is completely destroyed by a fire, buildings cover is likely to cover things like the cost of clearing the site, hiring an architect, and the cost of materials for the rebuild. For this reason, buildings insurance is not a luxury but a necessity.
Contents insurance protects your personal belongings and provides compensation in the event of damage, loss, theft, flooding, and other similar circumstances. The policy covers anything not physically attached to your home like your electronic devices, furniture, and appliances. While optional, it is always recommended that you have contents insurance.
Buildings and contents insurance
Buildings and contents insurance is a combined home insurance policy that does what it says on the tin. This type of home insurance provides cover for both your home and its contents, making it a popular choice with many homeowners. The main reason is that it can be cheaper to take out a combined policy. However, it’s also easier to manage a single policy, particularly if you do need to make a claim on your insurance.
What does home insurance cover?
Each home insurance policy will cover different things. In most cases, home insurance policies provide cover for damage caused by:
- Adverse weather, e.g. storms
- Fallen trees
- Subsidence affecting the stability of the property
Additionally, you can pay a premium to add optional extras like:
- Personal possessions cover
- Home emergency cover
- Accidental damage cover
- Legal protection
- High-value items cover
- Alternative accommodation e.g. if your home is uninhabitable due to flooding
However, your home insurance policy will not usually cover:
- Damage from wear and tear
- Routine maintenance
- Deliberate damage
- Damage from pets, pests or birds
- Faults as a result of bad tradesmanship
- Damage caused by negligence
- Breakdown of appliances
Do you need home insurance?
Yes, it is always recommended that you have some form of home insurance. Depending on your situation, you can choose to take out of the three types of insurance policies mentioned earlier. However, if you own your own property, a combined building and home insurance will give you the highest level of protection for your property and possessions. On the other hand, if you are renting, you will only need contents insurance (or tenants insurance), as your landlord will be responsible for the property.
How much does home insurance cost?
According to confused.com, the average annual prices for the three types of home insurance policies are as follows:
- Buildings insurance: £134.06
- Contents insurance: £77.83
- Combined buildings and contents insurance: £150.70
However, the cost of your home insurance will depend on factors such as:
- Where you live
- Cost of rebuilding the property
- Size and age of the property
- Your claims history
- Value of the home’s contents
- Whether you own high-value items
How do you find home insurance quotes?
The three main ways to find home insurance quotes are:
- Insurance comparison websites: this is the easiest way to find quotes for home insurance. By using a comparison website, you’ll be able to look at multiple policies and find one that best suits your circumstances. It is worth being aware that this may not be the cheapest quote, so look at the specifics of each policy and choose one that covers what you need it to.
- Direct from home insurance providers: some insurance companies such as Aviva and Direct Line do not show up on price comparison websites, so it is advisable to get quotes directly from insurers. The easiest way to do this is to head to their website. Alternatively, you can usually contact them and speak to a customer service adviser.
- Through an insurance broker: these are insurance specialists that can advise you and help you choose the right insurance policy. They are particularly useful if you have more complex needs such as needing to insure expensive furniture or you’re a landlord with multiple properties.
As with any type of insurance, always do your research, shop around and compare home insurance quotes, and don’t just pick the cheapest policy. This will help you get the right level of cover and provide you with peace of mind that your home and possessions are properly protected.
How do you get cheaper home insurance?
There are several things you can do to get a more competitive home insurance premium, including:
- Installing alarms: increasing your home’s security and safety with a smoke alarm and burglar alarm can help reduce your premium. Just ensure you choose approved models for each alarm — such as a NACOSS alarm (National Approvals Council for Security Systems).
- Increasing your voluntary excess: offering to pay more towards a claim may mean your home insurance costs less. However, before you increase your excess, make sure you can afford to do so.
- Increasing home security: some insurers will only provide you with a policy if you have BSI-approved locks on doors and windows. Regardless, adding better locks and security systems will benefit you by protecting your home and acting as a deterrent for burglars.
- Building up a no-claims bonus: some providers offer discounts on home insurance if you have a history of no-claims, so it’s worth checking this with your home insurance company.
- Taking out a combined policy: often, taking out a combined buildings and contents insurance policy is cheaper than buying two separate policies from different insurers. So, if you need cover for both, it’s worth looking at combined policies.
- Paying for insurance annually: usually, it is cheaper to pay for your insurance annually rather than in monthly instalments.
In this section, we’ll answer some of the most frequently asked questions about home insurance.
Is it worth claiming on your home insurance?
This depends on whether claiming is likely to save you money. Claiming on your home insurance will usually increase your premium. In fact, households who have made a single claim on their home insurance in the last five years pay an average of 57% more than those who haven’t. However, if the cost of the damage or loss to your home is far higher than the potential increase in your insurance premium, then it’s generally worth claiming on your home insurance.
How does the excess affect your insurance premium?
An excess is the amount of money you pay when you claim on your insurance policy. Home insurance policies come with both a voluntary and compulsory excess. As the names suggest, the voluntary excess is the amount you choose to pay in the event of a claim, and the compulsory excess is the amount you have to pay.
Generally, the higher the voluntary excess, the lower your insurance premium will be. However, a higher excess will also mean that you will receive less money from your insurance provider if you make a claim. On top of this, you’ll also still need to pay both the compulsory and voluntary excesses. So, when setting your voluntary excess, it is important that you choose an affordable amount.
Do you need to tell your home insurance provider that you work from home?
Usually, you will not need to tell your insurance provider if you work from home. That said, it will depend on the nature of your work. Say you do clerical work in a home office with a computer; it’s unlikely you’ll need to notify your insurance broker. However, if your work has more associated risks, your standard home insurance policy may not provide cover. For example, if your job requires frequent visitors to your home or you operate a business from home with stock kept on the premises. In these instances, it is best to check with your home insurance provider to see what your policy covers. You may be able to pay a premium on your home insurance policy to cover these extras. Alternatively, you may be able to get an extension on your business insurance policy.
Is your home still insured while you’re on holiday?
While you’re on holiday, your home is classified as unoccupied. Most home insurance policies cover an unoccupied home, up to a certain number of days. This is usually 30 days per year, after which the policy is considered invalid. Additionally, if you go on holiday, there are also often other stipulations in home insurance policies that you must abide by for your home insurance to be considered valid.
For example, in colder months (usually considered to be November through to March) your insurance provider may reduce the number of days you can leave your home unattended for down to five days unless you keep the heating on. Similarly, you may only be fully covered if you turn off the mains water supply to your home and drain the water tank.
Finally, if you are planning a long holiday, you’ll need to notify your insurance provider that your property will be unoccupied for more than 30 days. It is also worth taking out unoccupied home insurance, which is a specialist policy that usually allows you to go on holiday for 60 days. This will give you peace of mind that your home and its contents are properly protected while you’re away.
Do you need a new home insurance policy if you rent out your old house?
If you decide to rent out your old property, you usually won’t need to take out a new home insurance policy. However, you will need to let your insurance provider know that you have tenants — failure to do so will invalidate your insurance policy, leaving you out of pocket if you need to make a claim.
The quickest and easiest way to update your policy is to simply contact your insurance company to let them know the property is being rented. They will then likely change the existing standard home insurance policy into a basic landlord policy. However, it is worth being aware that the higher risks associated with being a landlord will usually increase your insurance premium. Also, the policy will usually only cover the basics, so it’s often better to shop around for specialist landlord insurance and get the most coverage for your money.
Does home insurance cover your children while they are away at university?
Some home and contents insurance policies covers include the section ‘temporarily removed from the home’, which may cover your child’s possessions against theft or loss while they are away at university.
Usually, for your insurance policy to cover your child’s possessions, your home will need to be listed as your child’s main permanent address while they are studying at university, and the items will need to be in their student accommodation or at home.
If you’re unsure what the scope of your home insurance policy is, speak to your insurer. If your existing policy does not provide adequate cover, you can pay to extend the policy and add additional cover for specific items such as electronic devices. This is usually called ‘all risks’ or ‘unspecified personal possessions’. Alternatively, your child can take out a new policy of their own, such as contents insurance for tenants, which will also cover their personal belongings while at university.