If you have finally managed to get your foot on the housing ladder and are buying your own home, or whether you have been an owner-occupier for many a long year, your house is likely to have been one of the biggest investments you have made in life – Getting home insurance is important to protect your investment.
Figures published by the Land Registry show that the average house price in the UK is currently £243,520. That is the sum you stand to lose if a serious accident results in the complete destruction of your home and you have no insurance to cover the loss.
That simple fact alone may be all that is needed to underscore the importance of the building insurance which is typically the major component of home insurance – it protects the very structure and fabric of your home against potentially disastrous events such as fire, storm damage, impacts (from vehicles or falling objects), flooding, vandalism, theft and break-ins.
With a total building sum insured that is the equivalent to the cost of completely rebuilding your home in the event of the destruction of your property (as well as costs involving clearing the site of debris etc.), you may rest assured that your investment in its bricks and mortar is safe.
You may also find that if you have a mortgage on your home, then it may be a condition of your mortgage agreement that you have adequate building insurance at all times. This protects both you and your mortgage provider’s financial interests.
Not all policies are the same, however, so you might need more specialist forms of home insurance if yours is a listed building, for example, or of non-standard construction. Depending on the location of your property and its history of past claims, ome elements of cover may also prove more difficult, so you may also need to consider the importance of specialist subsidence insurance or flooding insurance.
Your home is more than just the shell of a building, but its contents also include all of your furniture, furnishings, belongings and possessions. These also need protection against theft, loss or damage – in this instance, in the form of contents insurance, which is available not only for owner-occupiers, but tenants too.
Once again, home insurance cover is designed to provide sufficient financial compensation in the event of a claim to enable you to repair or to replace items which have been lost, stolen or damaged.
Different policies may give you the choice of settlement based on the replacement of old items for new (“new for old”) or after the deduction of an allowance for depreciation or wear and tear of those items (“wear and tear”) – with the former being generally slightly more expensive than the latter.
Either way, the importance of this element of home insurance may be driven home if a major incident damages many of your belongings beyond repair and you are faced with the financial burden of having to replace them.
That is what makes it surprising that a large section of the British public have no type of contents insurance – 16 million, or 35% of the population, according to research conducted by the Financial Inclusion Commission, in a report published on the 15th of November 2017.
More worrying, perhaps, is the finding that those who are on low incomes – and therefore unlikely to be able to afford to replace home contents that are lost or damaged in any incident – are even less likely to have home contents insurance. The proportion of households in these circumstances without such protection rises to 60%.
Although contents insurance and building insurance may be bought separately, discounts are often available when you buy the two together in combined home building and contents insurance.