Buildings insurance is a compulsory insurance if you take out a mortgage and covers you for damage caused by the elements to the structure of your home and any non-moveable items such as fixtures and fittings. The 'sum insured' needs to cover the cost of rebuilding your property and should not be confused with the market value of your home. To calculate this, the Association of British Insurers publishes a useful leaflet at http://abi.bcis.co.uk/index.cfm#calculatornotes.
For more on what buildings insurance covers, read our Buildings insurance guide.
Contents insurance, by contrast, is an optional insurance and 25 per cent of households fail to take it out. It covers items in your home which are not bolted down, or those that you would take with you when moving home.
Insurance cover for your belongings is more complex because of all the expensive gadgets we own these days. Desktop and laptop computers, personal videos and music players, iPods, DVD players and CD collections are just some of the items you may have forgotten to buy cover for in the past.
Most insurers place a limit on the amount you can claim for each individual ‘high risk item’ and if you want cover for your belonging outside the home you will normally have to pay an extra premium for ‘personal belongings.’ Always declare any high value items to your insurer as it will require valuations in order to price the cover accurately and your will need these in the event of a claim.
For further details on what contents insurance covers, read the "Contents insurance guide" elsewhere in this insurance centre.
Public liability cover
Remember that you are liable for accidents to individuals working at your property and damage caused to other people’s property.
For instance, if your window cleaner falls off his ladder and dies, you will need ‘public liability’ cover to cover you if you are sued. Most buildings insurance policies automatically incorporate public liability cover, but always check.
Similarly, if a tree in your garden falls onto your neighbour’s conservatory, your buildings insurance should pay out for any claims made against you for damage to your neighbour’s property.
How do I calculate the value of my possessions?
People are often surprised at how much their possessions are worth. It may seem a hassle, but it is worth getting an accurate estimate of the value of all your possessions, otherwise you risk under- or over-insuring. If you under-insure an item, then you will normally get a reduced payout or the claim could be rejected altogether. Over insure and you needlessly pay too much.
Also decide whether you want to insure your belongings on a ‘new for old’ basis, or on a 'wear and tear' basis. By taking a new for old policy, you will normally get brand new replacement items. However, if you go for an indemnity policy, which recognises that your belongings have been well used, clearly, you will pay a lower premium, but also get a lower payout.
If you have student offsprings, check whether you can get cover for their possessions while they are at university. Student digs are an easy target for burglars and thieves.
What is the excess?
The excess is the amount of each claim you have to pay yourself. Clearly, the higher the excess, the lower the premium. For expensive cover, such as subsidence, the excess could be as high as £1,000-£5,000, but policies differ, so check the small print. For more on excess, read our guide "Understanding excess" elsewhere in this insurance centre.
Buying insurance online
Some insures offer discounts for buying online and cash backs for introducing friends or family members. But while cheaper rates may be offered online, the minimum excess may be higher than average.
Cover for personal belongings outside the home, legal expenses (usually limited to domestic contract disputes, employment and wills) and home emergency cover are all optional extras worth considering depending on your lifestyle and the likelihood of you making a claim under these covers.
Cover for personal belongings outside the home, such as money and jewellery, may cost extra with some insurers, in which case, this will be separately itemised on your policy schedule.
If you ask for bicycle cover, check out exactly what it covers. Most bicycle ownners suffer more from vandalism (ie theft of wheels, lights or saddle), rather than outright theft of the bike, whereas most insurers only cover bicycle theft.
Some insurers offer cover on personal entertainment digital rights and downloads.
Pitfalls to watch out for
It may not seem like the best reward for your loyalty, but some companies charge a renewal fee. Some even charge for re-issuing documents. Also check whether you will be charged for cancelling your policy or missing a premium payment.
If you pay by direct debit, you could end up paying up to 18 per cent extra, so try to pay up front using a zero per cent credit card or at least a low interest one.
Remember to tell your insurer if you are going to be away from home for more than a month and be prepared to have to pay a small extra premium for an extended absence. Most insurers won't cover your property if you are away for more than 30 consecutive days at a time, unless you inform them in advance and pay any excess premium required.
No claims discounts
Your no claims discount can be protected for a small extra premium by buying "no claims discount protection." This will maintain your NCD status, even if you have to make a claim.
Making a claim
Your insurer may pay a claim immediately if it is for a small amount (usually under £500). But normally a loss adjuster will be sent investigate any large or suspicious claim.
If you need to make a claim, ring the hotline, fill out the claim form, and send in any supporting documentation, such as crime report number, witness statements, valuations and receipts. Check with your insurer before undertaking any emergency repair work as it may want to instruct its own contractors.
- Shop around.
- A burglar alarm, extra security fittings and membership of Neighbourhood Watch may give you a discount on your premium.
- When arranging buildings insurance, the sum insured needs to cover the cost of rebuilding your home, not the current market value of the property.
- Use the Association of British Insurer’s calculator to work out the cost of rebuilding your home: http://abi.bcis.co.uk/index.cfm#calculatornotes
- You don’t have to buy buildings and contents insurance from the same insurer, although some insurers will give you a discount for doing so.
- Look out for higher minimum excesses when buying online.
- When making a claim, check whether you need to claim under your buildings or contents insurance policy.
- Check the policy was not changed at renewal or that the paper documentation you are sent differs from what you agreed on the phone or online.
- Monthly direct debit payments may cost more than paying a lump sum upfront.
- Check what happens if you are paying monthly and miss a payment. Does your cover cease immediately?
- You can buy ‘no claims discount’ protection for a small extra premium.