Buying insurance for your home

YOUR HOME WILL PROBABLY be the most expensive purchase you ever make, so chances are you’ll want to protect it as best you can. If you couldn’t afford to rebuild your home from the ground up and replace everything in it, you need buildings and contents insurance.

WHAT KIND OF POLICY DO YOU NEED?

BUILDINGS INSURANCE
As the name suggests, buildings insurance protects the structure of your home as well as some fixtures and fittings. It covers the cost of repairing damage to or rebuilding the structure of your home. This includes its windows, walls, roof, outbuildings, and fitted kitchens and bathrooms. It provides cover for damage caused by events like fires, storms and floods.

If you own your home outright, buildings insurance is not mandatory. However, if you have a mortgage, your lender will usually require you to take out buildings insurance as part of the loan agreement.

Buildings insurance can be purchased as a standalone policy or as part of a home contents insurance package. When choosing buildings insurance, it’s important to make sure that you are covered for the right level of protection. You should also read the policy carefully to understand what is and isn’t covered.

When you get buildings insurance, you insure the structure of your home against damage from an insured event. You’ll also be insuring the property for the full cost of rebuilding it from the ground up. In the extreme case where your home has to be completely rebuilt, buildings insurance should also cover the cost of demolition, site clearance and architects’ fees.

It’s important that you get your buildings sum insured right, as this is the maximum your insurer will pay out if you claim. Your building should be insured for the re-building cost (not what you paid for the property or the current market value). If you need to make a claim on your buildings insurance, you will usually have to pay an excess. This is the amount you agree to pay towards any repairs or replacements.

When comparing buildings insurance policies, look at the cover levels, excesses, and any restrictions or exclusions. It’s also worth checking reviews of the insurer to see what other customers have said about their claims experience.

CONTENTS INSURANCE
Remember that your property isn’t just a building, it’s a home for your most valuable possessions. In short, home contents insurance should cover anything not physically attached to your building. Like buildings insurance, policies cover different things, and although having contents insurance isn’t legally required, it covers the cost of replacing or repairing your possessions if they are damaged, destroyed or stolen.

Contents insurance can give you peace of mind knowing that your belongings are protected in the event of an unexpected incident. It includes everything you would take with you if you moved home, including your furniture, kitchen appliances, curtains, bedding, clothing, television, computing equipment and jewellery.

There are a few things to consider when choosing contents insurance, such as the level of cover you need and the excess you are willing to pay. Make sure you get your contents sum insured right, as this is the maximum your insurer will pay out if you claim. It is also important to read the policy documents carefully to understand what is and is not covered by your insurer.

You will need to declare any high value items when you take out your policy, and they will usually be subject to a higher excess. This means that if you need to make a claim for one of these items, you will have to pay a larger amount towards the repair or replacement cost.

It is also worth bearing in mind that some insurers will not cover certain types of high value items at all. For example, many will not cover jewellery or artworks. If you have any items of this nature, it is worth checking with your insurer before you buy your policy to see if they are included.

Your contents should be insured for the cost of replacing them as new, not their current value. It is important to re-evaluate your contents sum insured on a regular basis, particularly after purchasing expensive items, or following a birthday or Christmas.

COMBINED BUILDING AND CONTENTS INSURANCE
You can also combine buildings and contents insurance policies, which might actually be cheaper depending on the insurer. Be sure to consider the coverage limits, excesses and discount options before making your final decision.

The cost of your cover will depend on a number of different factors including: the amount of cover you need, the value of your home and the items in it, the number and value of any high value items listed in your policy, the amount of excess you agree to pay, whether you have made a claim before or not, and the postcode for the property.

***The information in this article is purely informative. Buildings and Contents Insurance is available in the market, but we do not offer this service in-house at Charles Cameron & Associates. However, our professional, friendly advisers are still on hand to support you and can help you explore all of your mortgage and protection insurance options.