If you live in your own home you will probably require Buildings Insurance and Contents Insurance. In the UK you can choose different providers but many people purchase a combined Buildings & Contents policy for ease of handling claims should you suffer damage to the buildings and its contents. Also many providers offer a discount if you take out a combined policy.
A Buildings Insurance policy covers the structure of your home, its decorations, fixtures and fittings against damage caused by insured events such as fire, lighting, explosion, earthquake, subsidence, theft, storm, flood, etc. It covers the full or partial rebuilding of your home and the replacement of fixtures and fittings. When deciding on the sum to be insured, allow for the full rebuilding cost of your home. This is not the same as the purchase price or a recent valuation. The sum insured is the maximum the insurance provider can pay you for damage to your building.
A Contents Insurance policy covers your household goods and personal property within your home and also property for which you are legally responsible. Many policies include money, credit cards and valuables up to a stated limit and sometimes fixtures and fittings belonging to a tenant, if you have one. Contents Insurance covers your contents for loss or damage caused by insured events. It is important that you carefully estimate the value of your contents as "under insuring" may cause your claim to be reduced or rejected. Recently a new type of policy has been made available in which the value of your contents is based on the number of bedrooms in your home. You should judge if this estimate provides a good assessment of the value of your possessions.
There are 2 basic types of Contents Insurance. An "indemnity" policy takes into account "wear and tear" when a claim is assessed and is a lower cost option. This means that the amount you receive may not be sufficient to replace the damaged property. A "new for old" policy is more costly but the amount you receive should be sufficient to cover the replacement of the damaged property. Check if the sum insured is index-linked to allow for changes in replacement cost.
The market is very competitive, so obtain several quotes and compare policies.
Points to Watch: Once you have decided on the sums to be insured, check if the they are index-linked to changes in rebuilding costs for Buildings Insurance, and to changes in replacement costs for Contents Insurance. If not, "under insuring" on renewal may result in your claims being reduced or even refused. Read policy documents carefully for cover extensions and exclusions. They spell out what risks are covered and what are not and specify benefits such as covering the cost of emergency and alternative accommodation, legal expenses and architect fees under Buildings Insurance.
For Contents Insurance, check for "deductibles" and for requirements such as the installation of an approved alarm system. Cover extensions include accidental damage cover or damages arising out of your legal liability to the public. Valuables such as jewellery, furs, paintings, gold, silver, etc may require separate cover. In addition if you choose to insure some valuables (e g jewellery) when outside your home, an "All Risks" extension will be required. For peace of mind, choose an insurance provider with good market standing and a reputation for handling claims smoothly and quickly.
