Home Budgeting Finance Understanding Home Insurance

Understanding Home Insurance

Whether you are a homeowner or a tenant, taking out home insurance can give you peace of mind. However, with so many home insurance policies on the market, it’s important to make sure you understand what they cover so that you can find a policy that will suit your needs.

Types of Home Insurance

UK home insurance policies fall into two main categories – buildings insurance and contents insurance.

home_insuranceBuildings insurance provides cover for structural damage to your property from fire, storms, vandalism, floods, and other events. The circumstances in which your property is covered and the extent of the cover provided will depend on the terms of the policy you take out. If you’re taking out a mortgage, your provider will usually insist that you take out buildings insurance. Structural damage can also be expensive to repair, so taking out buildings insurance is a sensible move for almost all homeowners.

Contents insurance provides cover for the possessions you keep in your home if they get damaged in a fire or flood, for example, or if they are vandalized or stolen. As with buildings insurance, the amount of cover provided and the circumstances in which you can claim vary between different insurers and different policies. Some contents insurance policies also include cover for things like accidental damage to TVs and computers or lost food in the event of freezer failure. Contents insurance is suitable for people renting a property, as well as for homeowners.

You can buy separate building insurance and contents insurance policies from a wide range of providers, but many insurers also offer combined buildings and contents insurance plans. This is another detail that a prospective buyer should look into.

Specialist home insurance policies

Some insurers provide specialist home insurance policies. These include policies specifically designed for people with homes that may be difficult to insure under the terms of standard policies, such as houses with thatched roofs and listed buildings.

How to choose a home insurance policy

It’s important to shop around when you are looking for home insurance packages available in the market and compare the benefits offered by different plans, as well as comparing the costs. Look for a policy that provides all the cover you think you could need, but don’t pay for extra benefits that you’re never going to use.

Once you’ve chosen the most suitable plan for your needs, you may be able to reduce the cost by a range of methods. You may be able to lower your premiums by taking out a voluntary excess, meaning that you agree to pay a set amount of the costs involved when you claim, or by increasing your home security.

When taking out home insurance, it’s also important to assess the value of your home and your possessions accurately – over-insuring your home will mean paying more than you need to, whilst under-insuring it could mean paying out more than you expected to in the event of anything happening to your property or possessions.

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