Homes are expensive purchases on their own. Once you fill them up with your possessions, they can become even more expensive. It’s therefore worth taking the time to understand home insurance properly.
The basics of home insurance
Home insurance is generally divided into two broad categories. The first is buildings insurance and the second is contents insurance. There are, however, a number of add ons and complementary policies you may need or just want. Here is a quick look at the main types of cover and what they mean in practice.
The key point to remember about buildings insurance is that it’s to replace the building rather than the land. This means that the insurance value of your property may be substantially less than what you paid for it. There is nothing to be gained by overinsuring, so make sure you avoid overpaying.
Broadly speaking, contents insurance covers the contents of your property. There is, however, a lot of nuance in this. For example, standard home contents policies may exclude, or at least limit, certain types of property. They may only cover items in the main home, rather than outbuildings. They may also exclude accidental damage.
Some policies may extend their cover for a higher premium. Others may require you to buy separate policies. You may find that you end up doing a combination of both.
Cover for valuable property
It’s really important to read the fine print of your contents policy very carefully. There may well be restrictions on cover for certain types of property such as cash, jewellery and electronics. Other exclusions may also apply. Even if the insurer does offer cover for them, they may require you to declare the items specifically and potentially increase your premium for them.
If this is the case, then it may be worth investigating the pros and cons of including such items on your general insurance versus insuring them individually. In particular look at the breadth of cover involved as well as the price.
For example, a standard home contents insurer might be prepared to insure your bicycle against theft from your home. A specialist cycle insurer, by contrast, might cover you for theft in other locations. They might also offer valuable extras such as protection in the event that a third-party makes a claim against you.
Cover for outbuildings
You may see your outbuildings as part of your home, but your insurer may see the matter differently. This means that it’s strongly recommended to read the terms of your policy carefully and, if necessary, clarify them in writing with your insurer. You may find that covering outbuildings requires you to pay for add-on cover and/or comply with security requirements.
In fact, even if your insurer does not explicitly require you to have any security features on your outbuildings, it may be to your advantage to invest in them. This will help to reduce the chances of having a claim denied due to you having failed to take sufficient care of your property. They should also help to reduce the chances of you falling a victim to theft in the first place.
Cover for accidental damage
Insurance can protect you either against what happens to you or against the consequences of your own actions. In the context of home insurance, the latter is generally known as “accidental damage cover”. It may or may not be included as standard with your regular buildings and/or contents cover.
If it doesn’t, then it can be well worth purchasing as an add-on or complementary policy. That way you’ll be covered for any damage you do to your home and/or its contents. Accidental damage cover isn’t just for DIYers (and people with young children). It can be extremely useful for just about anyone.
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