Basically, there are two types of home insurance. One type covers the property and the other covers the contents of your home.
- Building Insurance
Typically, buildings insurance covers fire, flood and any other disaster that may hit your home. It takes care of any damage that may be caused to your home and the fixtures and fittings therein. The amount of buildings insurance cover you need will depend on the cost of rebuilding and renovating your home (not its current market value).
When you get a mortgage, the lender will use the valuation report to determine the property’s rebuilding cost. They will then use this to determine how much building insurance you need.
At times, such malicious acts as vandalism may be included in your buildings insurance. Exclusions generally include terrorism and the usual wear and tear. Therefore, you should read the small print before you get this insurance type. If you are new to the UK property market then please understand all of these facts as fully as possible.
- Contents Insurance
Contents insurance covers all the belongings in your property. These belongings include electrical appliances, furniture, works of art, kitchen equipment, among others. It also covers the items in your garden, carpets and curtains.
This kind of insurance pays out if your belongings get damaged by flooding or fire or if they get lifted during a burglary. Since you have to pay extra to cover such high- risk expensive items as laptops and cameras, it may be better to insure these individually. Some contents insurance policies also limit the amount you can actually claim for single items to around £1,000. Of course, not all contents insurance policies cover accidental damage.
Most insurance companies will use your address while working out the premiums you need to pay. If you live in an area that is prone to subsistence and crime, then you may have to pay higher premiums. Similarly, if your area is prone to flooding, the insurance may charge high premiums.
Cutting the Cost
To ensure you pay less for your cover, find out if you can opt for higher excesses. An excess is the amount of a claim that you have to pay on your own. You can also install a smoke alarm, increase security in and around your house and buy the contents and buildings insurance from one provider.
Buying Insurance Cover
Shop around to look for the best policy available. Online comparison tools and actual brokers can help you locate good home insurance deals. Check out what different companies are charging and see if you can get a discount before settling for any given insurer.
Making a Claim
Finally, always make sure that you notify your insurer the moment something goes amiss. For instance, after a burglary, tell the insurance company what happened and quote the incident number that the police assigned to you. As far as possible, ensure that the information you provide is true and accurate. Read the small print on your insurance policy to make sure that you are covered for the risk that you wish to be compensated for.