Insuring your house is vital to making sure that your home is protected from any unforeseen circumstances.
There are two main types of home insurance options that you can essentially look into – buildings insurance and contents insurance.
Here at Kwik Fit Insurance Services, we’ve decided to provide you with a helpful guide to explain what the differences are for your benefit
So read on!
- Buildings insurance – This covers the physical structure of your property against damage and destruction as the result of flooding, fire, lightning, subsidence, theft, vandalism or water damage.
- Contents insurance, on the other hand, is designed to cover theft or damage to the contents of your home, or your possessions. This can therefore include things such as your clothes, electrical items, jewellery, sports equipment.
What does buildings insurance cover?
Buildings insurance covers your home’s permanent structure. This means the walls, roof, windows, doors etc. It also covers permanent fixtures like fitted kitchens, plumbing, cabling, baths, drains and sinks. Externally it can also cover hedges, fences, garages and sheds that form part of your property.
Your insurance policy will cover the cost of rebuilding your home if it's damaged or destroyed, and should cover the full cost of rebuilding your house.
What is covered may differ from insurer to insurer, so please ensure that you carefully read the policy wording of any buildings insurance policy you take out for full details.
Do I need buildings insurance?
If you have a mortgage, your lender will insist that you take out buildings insurance. Without buildings insurance you will most likely be refused a mortgage.
If you're a tenant then it’s down to your landlord to arrange for buildings insurance for the property you live in – however you may wish to take out contents insurance to cover your belongings for better peace of mind.In other cases, buildings insurance is not compulsory, but you'd be unwise to do without it – think about how you would afford to rebuild or repair your home should it be damaged or destroyed.
If you're a leaseholder your lease might say that you should have buildings insurance with a named insurer, or the freeholder may take out insurance and charge you for it.
What does contents insurance cover?
Contents insurance covers the items in your home rather than the building itself. This applies to everything in your home that isn’t fixed or fitted.
So, while kitchens, built-in cupboards and bathroom suites are covered by buildings insurance because they are fixed or permanent parts of the property, contents insurance covers the sort of belongings that you would take with you if you were moving house.
What is covered may differ from insurer to insurer, so please ensure that you carefully read the policy wording of any contents insurance policy you take out for full details.
Do I need contents insurance?
If you have a mortgage it’s unlikely that your mortgage provider will require you to take out a contents insurance policy as they typically do with buildings insurance. Nonetheless, it’s always wise to take out contents cover if you value your belongings and would want to replace them if they were damaged or stolen.
If you’re a tenant contents insurance is not the responsibility of your landlord, unlike buildings insurance. It is therefore a good idea to take out contents insurance (sometimes called tenants insurance) to protect your belongings.
How much cover do I need?
You need to make sure that you’re covered for the true cost of rebuilding your home. This is called the sum insured, and it is not the same as the price you paid for your home or its current resale value.
Rebuild costs should include the cost of demolition (if needed), clearing the site, architects' and builders' fees. These rebuild costs are often less than the current market value of a property, so you want to make sure that you don’t over insure your property.
If your home is not of 'standard construction' (ie, brick walls with a tile roof), you may need to get in touch with Royal Institution of Chartered Surveyors and ask a chartered surveyor to prepare a valuation for insurance purposes.
When calculating your contents insurance it’s a good idea to list all the rooms in your home then go through each room noting down all the items in them.
Add a value for each item on the inventory and total them all up to work out the overall value of the contents cover you require. It’s well worth being as thorough as possible (being sure to include items you keep outside the house like bikes and garden ornaments) to ensure that you aren’t underinsured.
Make sure you pay close attention to what’s covered in your policy and check if high risk or high value items like antiques or expensive computer equipment are included or need to be protected with additional cover or a special extension to your policy.
What affects the cost of buildings and contents insurance?
- Excess – in the event of making a buildings insurance claim you’ll be required to pay an excess, while your insurer will cover the rest. You can opt to pay a larger excess, which often results in lower policy payments, or vice versa.
- Shop around – mortgage providers require you to purchase buildings insurance before you purchase a property, and they will offer you their own buildings insurance product. However, these can be overpriced. There's no requirement to get buildings insurance from your mortgage company, and usually it can be cheaper if you go elsewhere.
- Don’t over insure – commissioning a survey is the most reliable way to establish your home’s true rebuild value, as opposed to its (usually higher) market value.
- New for old or indemnity? – It is possible to pay less for contents insurance by opting to take out indemnity cover rather than new for old cover.
This takes into account depreciating value and pays out according to current market valuation rather than the cost of replacing stolen or damaged items with new equivalents.
Do you need additional cover? – The level of cover you decide to take out on your contents insurance policy will tend to impact on the overall cost.
Extensions might include things like accidental damage cover, which covers accidental damage to items, or accidental loss or damage cover for personal possessions that you take out of the home, and will typically cost more than standard cover.
What can invalidate my buildings and contents insurance policy?
- Under insuring – you should never artificially lower the ‘sum insured’, as you may be breaking your mortgage terms and will find yourself underinsured if disaster strikes.
- Failure to inform – if you make any structural changes to your property you must inform your insurer first. This includes knocking down walls, adding walls or extensions, and loft conversions.
- Flood risk – if you know your home is at a higher risk of flooding due to its location, it’s best to let your insurer know from the outset.
- Report thefts promptly – failure to report a theft to the police within 24 hours might result in a rejected claim. It’s also important to make sure you get a crime number from the police as the insurer will need one when investigating your claim.
- Activate your alarms – if you have informed your insurer that you have a burglar alarm it is important to ensure it’s activated whenever you leave your home.
- Don’t make it easy for burglars – Always close and lock windows in unoccupied rooms. If a burglar is found to have gained unforced entry into your home it may invalidate your insurance.
So there you have it, hopefully our guide will provide you with a clearer view of the differences between the two and remember, you can always refer to our FAQ page should you require more information.
† 10% of customers buying Home Insurance online with us between 1st June 2015 and 31st August 2015 received a price that was at least 20% cheaper than the price they would have been offered had they called us. Discounts depend upon individual circumstances, level of cover & payment method. (Excludes optional extras).