Do you know your building insurance from your contents insurance? How about the excess on your policy? Buildings and contents insurance can seem like a minefield for those looking to buy or move into their first home, so here’s a beginners guide to the insurances you need to cover your home and belongings.
First things first
Whatever policy you buy, the best way to find out about your own policy is to read the policy documents i.e. the policy booklet, policy schedule and covering letter. The policy schedule is particularly important as this will set out the cover selected, the sums insured and any endorsements which apply to your policy, for example home security requirements you must meet. The policy booklet details what you can and cannot claim for, and limitations and exclusions which apply.
If you own your own home then it is usually a condition of your mortgage that you need to take out buildings insurance – if you rent then this insurance needs to be taken out by your landlord.
Building insurance is the responsibility of the homeowner and covers you if there are any accidents that damage the physical structure of the home, e.g. if you had a fire that damaged the foundations and wall structure). It can also include any outbuildings such as garden sheds and garages, as well as any fitted internal structures such as wardrobes or integral kitchen appliances.
It is important to remember that buildings insurance does not cover the general maintenance of your property. Ensuring that water pipes and tanks are insulated and making sure that gutters are clear of debris is good practice and can reduce the chances of you needing to make a claim.
The buildings sum insured is based upon the cost of rebuilding your house, so the amount covered is not necessarily the market value of your home, but how much it would cost to rebuild it (usually lower than the market price).
You need contents insurance whether you are a home owner, tenant or even a student living in rented accommodation. (You may also need it if living in student halls, although many offer the insurance as part of your contract. Be sure to check.)
Contents insurance covers your carpets, curtains, furniture and kitchen equipment (freestanding, not fitted). It also covers your personal belongings – anything from your jewellery and laptop to reading glasses, mobile phones and garden equipment.
When you take out a contents insurance policy it’s important to make sure that the sum insured is enough to cover the costs of your items as new, e.g. how much it would cost to replace all of your furniture and belongings.
The cover you can expect will vary, however loss or damage resulting from the following are included on most policies:
- Fire, explosion, earthquake or lightning
- Storm or flood
- Subsidence, landslip or heave
- Falling trees or branches
- Water leaking from tanks or pipes
- Oil leaking from heating systems
- Malicious damage
- Theft or attempted theft
- Television, satellite or radio-signal apparatus breaking or collapsing
- Impact by aircraft, other flying devises, or any vehicle or animal.
Here are some examples of exclusions that apply to most household insurance policies:
- General wear and tear
- Faulty workmanship
- Mechanical or electrical breakdown
- Any amount over the limits shown on your policy schedule or in your policy
- Restricted cover when the home is unoccupied or is let to tenants
Extended Accidental Damage
This is normally provided as optional cover under most buildings and contents insurance policies, e.g. putting your foot through the ceiling when in the loft under buildings, or spilling paint on a carpet under contents.
Personal Possessions Cover
If you take out contents insurance you can normally choose optional cover for your personal possessions against loss or damage in and away from the home. This would include personal belongings and valuables that you normally wear or carry and can include money and pedal cycles. This provides cover anywhere in the UK and for a limited period in any one insurance year abroad.
FAMILY LEGAL PROTECTION
If you insure your buildings or contents, you may also choose to take out cover for the costs and expenses of certain UK legal proceedings. For example the costs of pursuing legal proceedings arising from a breach of your employment contract or the costs of defending legal proceedings arising from a motoring prosecution brought against you.
An Explanation of Some of the Terms You Might See in Your Policy:
Here are a few technical terms that are useful to understand when taking out your insurance policy.
Cancellation - Termination of a policy before it is due to expire. There will be a cancellation clause in a policy, which will set out the cancellation terms for both the insurance provider and the policyholder. In some cases this will result in a return premium being paid by the insurer to the policyholder.
Claim - A claim is what you make to an insurance company after suffering a loss that is covered under the policy. In effect, you are ‘claiming’ for compensation for your lost, stolen or damaged property.
Excess - Excess is the amount of money that you pay in the event of a claim. Offering to pay an increased excess will result in cheaper premiums (the larger the excess, the cheaper the premium), but you will need to pay the excess yourself e.g. if you have a £200 excess and you damage your laptop, which costs £500, the insurance company will give you £300 to cover the loss. It may be the case that you have different excesses for different claims, so check your policy.
Exclusion - A provision in a policy that will advise what is not covered or what restrictions apply to an item of cover.
Liability - Your buildings and contents insurance may provide cover in relation to your liability as owner and/or occupier of a property for death, injury or property damage for which you may be held responsible.
If you would like a quote on your buildings and/or contents insurance, Teachers Building Society may be able to help. Our buildings and contents cover is provided and underwritten by Legal & General.