Buildings Insurance covers the actual structure, fixtures and fittings of your home. Buildings insurance will protect you against any loss and damage to the physical structure of your home.
You do not have to have buildings insurance by law, however the majority of mortgage lenders legally stipulate in their contracts that you have buildings insurance. You do not however have to take out your buildings insurance with your mortgage provider, unless you agree to a special mortgage package that incorporates their own buildings insurance within the mortgage deal.
Remember that if you are not living in the property you are still liable for any damage, make sure that you have organised adequate building insurance for your property prior to signing for your new home. From the moment that you sign the contract for the property, you will legally be responsible to pay for any damage that occurs to the property.
The total amount of cover that you take out ought to be enough to cover rebuilding the entire property that you own. The sum insured is the maximum amount the insurance company can pay you, which must be the full re-building cost of your property. The amount that you need to cover your property for can be found on your valuation report that you would have received prior to moving in. Any significant under-insurance could mean that your claim may be reduced or even rejected. This amount need not be the actual market value of the property but the amount you could sell the property for. This is because you should be able to rebuild your property for significantly less than the market value. Good home insurers will be able to work out this amount based on several factors such the property size, location and its market value.
The value of your property should increase with inflation year on year. Most insurance companies will index-link their cover in accordance with this, so as you renew your policy each year the amount you insure your property for will also adjust. If you feel that your property has risen in value significantly between renewal periods, it’s important that you increase the value of your buildings insurance to ensure your buildings insurance policy matches the protection your home requires.
With comprehensive buildings insurance, you can be rest assured that your insurance provider will cover the cost of repair and even the entire rebuilding of your property in the event of damage. Buildings insurance cover is not only designed for major damage to the property. Broken windows, doors and interior fixtures and fittings can all be claimed on under your comprehensive buildings insurance policy.
Contents Insurance is a policy designed to cover your possessions. Contents insurance policies are generally very comprehensive, they cover more or less everything that you own such as furniture, furnishings, clothing and most other household goods dependent on the cover that you have.
Home contents insurance is intended to protect you against loss or damage to your belongings whilst they are in your home through a result of accidental damage, fire, theft or flooding.
If you live an area where your home is prone to a specific type of risk, for example flooding, make sure that your home contents insurance provides adequate protection against such an event. If this is not the case you won’t be able to make any claims for the damage inflicted upon your property.
There are a wide range of contents policies are available. The cheapest of all is the ‘indemnity’ policy, which takes into account general wear and tear. Costing a little more is home contents insurance where you can insure items up to a particular value, which is called the ‘new for old’ policy. With this policy you will be paid the cost of a brand new item that was either broke or damaged. Inevitably, all items are prone to accidental damage no matter how careful you may be. Electrical equipment such as computers, televisions, audio equipment along with glassware are the most prone to accidental damage. These items are generally the most valuable possessions within a household and therefore maybe worth insuring on a ‘new for old’ policy.
Contents insurance policies may also offer additional sections such as liability insurance and legal expenses to cover for those extra risks. To have the additional sections added to your policy the chances are that you may require an extra premium.