‘Home insurance, how exciting!’ said no-one, ever. But along with car cover, arranging home insurance is one of those life admin chores that can have a huge impact on your finances, so it needs doing – and doing properly.
Here’s how to choose what’s right for you.
There are two main types of home insurance; you can buy them separately or as a combined policy:
Insurers determine the scope of their own policies, so they can vary; but on the whole, you can expect your insurer to cough up for events like:
Like most things in life, the devil is in the detail, so it’s a good idea to double-check the terms and conditions set out in your policy and make sure you’re happy with them (or at least that you think they’re fair and reasonable).
One example worth highlighting is compensation for storm damage, as insurers sometimes have a specific definition of what a storm is – for example that wind speeds must be over a certain number of miles per hour.
No – you don’t need it by law. If you’re lucky enough to own your home outright, you’re under no legal obligation to buy a policy. If, however, you have a mortgage, your lender may make home insurance a condition of the loan.
Of course, if you don’t have a policy and your home or possessions are damaged or stolen, you’ll have to cover the cost of repairs or replacements yourself.
Needless to say, it’s crucial to get the level of cover right – this is the maximum amount of compensation you could get if you make a successful claim for everything you’ve insured.
For buildings insurance, the amount should be enough to cover the cost of rebuilding your home if it were completely destroyed (insurance isn’t an industry based on optimism). Plus, remember that the rebuilding cost isn’t the same as the market value of your property. If you haven’t a clue how to work out the amount, don’t worry; use either:
Note: You’ll also need to consider any exclusions set out in your policy, as these could affect what is and isn’t covered, as well as the cost. For example, policies often exclude accidental damage, but you can usually pay a little more for the added protection.
For contents cover, there are three methods to work out the overall level of cover you need:
Note: You’ll need to make a note of any single-item limit, as discussed below, as this is the most you’ll get for any one item.
When it comes to insurance, there’s no one size fits all. The ‘best’ policy is one that meets your needs, so it’s wise to:
One of the golden rules about shopping for insurance is that it’s not necessarily about bargain hunting – it’s about getting what’s right for your circumstances.
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