Different types of home insurance

There are two main types of home insurance, buildings and contents insurance. Buildings insurance is for protection against financial losses if the actual structure or permanent fixtures of your home are damaged or destroyed. Contents insurance gives you cover for the items in your home that would go with you if you moved. With lots of different policies available providing very different levels of cover, there are some things you should be aware of when buying a policy.

It is essential that your building insurance policy gives you cover for the full cost of rebuilding your property and not just the market value. This will protect you from fluctuations in the property market and will sometimes reduce the premium. The land your home is built on is unlikely to be damaged even if your house is destroyed by fire or flood. Rebuilding a house on the existing plot is often less expensive than buying another. Remember that similar houses may be worth different amounts even if they are only a few streets apart, but the cost of rebuilding will be the same.

Contents insurance needs to give you enough cover to replace your belongings, so be careful not to under insure. This means that the maximum your insurer will pay is not enough to cover your losses. Your premium will be higher if you need more cover, but it is a mistake to under insure because if you do need to make a claim you will lose out financially.

To get an accurate idea of how much cover you need, take an inventory of your belongings, including gifts and homemade items, and work out the total. Look for new for old policies so that you get the cost of a new replacement item, not the value of your old used one which could be a lot less.

You should think about cover for the contents of your home that you take out and about, like mobile phones, or jewellery. Also think about the contents of your garden, greenhouse and shed, are your tools and garden furniture covered?

Different buildings insurance policies give different levels of cover. In addition to the house, look for policies that include outbuildings like your greenhouse, shed and garage, which can be expensive to repair.

If you build an extension, convert your loft or make any other big changes to your home make sure that you tell your inSurance company and update your policy. If not you could lose out if the improved aspects of your home need to be repaired or rebuilt.

Look out for discounts if you buy your contents and buildings insurance from the same provider. Do shop around and remember that the cheapest cover may not be the best value, and for a slight increase in premium you may be very grateful for the additional cover should you be unlucky enough to need it.