Home Insurance Guide

GSI's guide to...

What is home insurance?

Home insurance is split into two parts, buildings insurance and contents insurance. You can arrange one or both depending on your requirements, and you can even arrange them with different insurance companies if it works out more cost-effective.

What does home insurance cover?

Home insurance protects your property’s structure and contents against loss, theft or damage caused. This can include flood, subsidence, theft, malicious damage, fire damage or storm damage to name some of them. This allows, depending on the cover you have in place, for you to claim for repair and replacement cost for structural damage to the property itself, as well as furnishing, electrical items, flooring, carpets etc.

It does not cover for wear and tear on either buildings or contents, so home insurance isn’t a replacement for keeping your property and the appliances within maintained to a good standard. You may be able to arrange Home Emergency cover to give you some protection for this kind of situation, and this is discussed later in the guide.

The buildings is normally covered on a reinstatement basis, meaning that if your house is completely destroyed, it would be rebuilt to the same design, size, construction methods etc. It is designed to put you back in the same position you were in before the claim occurred.

Contents is usually on a new-for-old replacement basis. For example if your TV was damaged, it will be replaced by a new TV of the same make and model. If that model is no longer available, then an equivilent of similar size and specification will be sought.

Is home insurance compulsory?

If you have purchased a property under a mortgage, then it is usually a requirement of the mortgage company that you have buildings cover at a minimum before they will release your funds. This is to protect your investment in the event of a loss.

Other than that, there is no legal requirement to arrange home insurance.

Should I auto-renew my home insurance?

This depends on your individual situation, and it is worth considering what your requirements are before seeking new insurance.

As we will discuss later in the guide, not all home insurance policies are created equal, and you may have chosen your current policy because of some of the benefits, such as a low excess, or a higher limit of cover for contents in outbuildings, for example. For any new cover option, you will want to make sure that your needs are met.

What is a joint home insurance policy and should I take one out?

A joint policyholder is a second person who can deal with the insurance policy, or make a claim. This would usually be your wife/husband/partner.

It is worthwhile adding a joint proposer, as it will prevent any delays in contacting the insurer if you are unavailable. It can also reduce your premium.

What is accidental damage cover?

Accidental Damage is often described as an unintentional one-off incident that damages your property or its contents, that wouldn’t fall within the standard household perils.

Most home insurance policies offer some level of accidental damage cover as standard, which usually includes TVs/Hi-Fis/DVD players, fixed glass in windows/doors/furniture, fixtures, fittings, underground pipes and underground cabling. Beyond that, you would need the extended level of accidental damage, which comes at an additional cost.

You can choose to have the extended level of accidental damage on buildings only, contents only, or both.

Can I cover damage by pets?

Most home insurance policies don’t cover damage caused by pets. A separate pet insurance policy may provide some cover for this.

Home insurance and your mortgage company

As referred to earlier in the guide, if you are buying home insurance on a mortgage, the mortgage company is likely to expect that you have buildings cover in place at a minimum.

They may include some specific requirements, such as what the insurance covers for, and the excess.

On very rare occasions, it may be a requirement that you purchase home insurance with your mortgage company, but this is unlikely, and you should be able to shop around the whole market to find the most competitive option in most cases.

Working from home

Over the last 10-15 years in particular, there has been a marked increase in the number of people working from home. Most recently, COVID-19 has made remote working necessary for a lot of businesses.

The short answer is yes, you can work from home, but it is important to tell your insurers, even if you’re only doing paperwork, or working from a computer.

Business use is defined as “clerical only” if you hold no stock, there is no manufacturing taking place, and nobody visits the home in respect of the business. As this is pretty commonplace, it’s considered to be pretty standard, and it’s unlikely your current insurer will even charge you anything extra for this.

If your business use is more involved than clerical only, you may be better suited to a specialist working from home policy. This can include additonal cover, such as to stock and business equipment, as well as liability insurance for anyone who visits your home.

Garages/Sheds and Gardens

We are particularly talking about contents here, such as tools and machinery in outbuildings, and furniture in the garden.

Contents in outbuildings will usually have less cover than items within the main home, particularly in respect of theft, where the insurers will usually set a maximum amount that you can claim up to. You may find that this limit only applies to theft claims, with any other loss being paid up to the full amount. If your garage holds heavy machinery, such as for woodworking, then the risk of it actually being stolen may be low enough for you to accept, as long as you know the full replacement will be paid in the event of other damage, such as fire or a flood.

In respect of contents in the open, you will probably find that the cover available is very limited. For example most policies nowadays exclude any damage for storm damage whatsoever.

If you are lucky enough to have a fixed hot tub (i.e. plumbed and/or wired-in) or swimming pool, this is usually considered part of the definition of buildings. It is worth checking this is the case when reading your policy documentation, but the good news is that usually, the cover won’t be restricted in the same way that contents in the open can be. Also considered part of the buildings would be the structures of sheds and garages.

One exception to the rule here is fencing, which is again considered part of the buildings. Over the past ten years, the cover available for fencing has been reduced across the industry, with most policies now not covering fence panels whatsoever in the event of a storm. It is worth keeping this in mind, as keeping your fencing maintained may save you the cost of lengthy repairs when adverse weather hits.

Taking items away from home

Most home insurance policies will, by default, not give you much cover for items you take away. Any cover that is provided is usually limited a cost amount, and again is usually only while inside of a locked building, or in a removal van while you are moving home. You can check this in the contents temporarily removed section of the policy wording.

If a member of the family is a student living in halls of residence, then they may get some cover under a separate student contents section.

Beyond this, you will have to request cover for items away from home, which is sometimes referred to as personal possessions. Mobile phones, tablets, laptops, pedal cycles, and items valued over £1,000 will generally have to be listed as specified items, but it is also possible to have unspecified cover up to a certain amount. For example if you had £2,000 of unspecified personal possessions cover, you could lose a £600 watch, a £700 camera and a £700 ring in one incident, such as if your bag was stolen, and still be covered.

If you have a high amount of contents (over £75,000) then you may be better suited to a Mid-High Net Worth policy which covers all of your contents worldwide – Essentially you would not have to specify which items you are going to take away, and can be confident that whatever you take is covered.

Excess

The excess is the pre-agreed amount of money that you need to pay to your insurance provider in the event of a claim. This excess usually differs depending on what you’re claiming for. For example, a policy may have a £100 excess, but this may be increased to £250 for escape of water claims, or £1,000 in the event of subsidence.

You may be offered the opportunity to pay additional excess, known as voluntary excess, in exchange for a lower premium at the start.

One thing to consider when choosing an excess is making sure that you will be able to afford to pay it if you do have to make a claim.

Cover while away on holiday

Insurers understand that sometimes, people will go on holiday. Generally a policy will cover for at least 14 days, with a vast majority of the market allowing 30 days as standard, with a select few offering higher.

During this time, there are no restrictions to your cover and your policy operates normally.

If you go beyond the time period of the policy, you will usually find that the cover offered is stripped back to bare minimum, if the company will pay out in the event of a claim, so it is worth planning ahead if you are going to be away for longer.

If you do take extended holidays, then specialist policies that allow for extended unoccupancy are available. These usually allow for full cover to stay in place while you’re away, but you can expect to be asked to have your property inspected regularly by a friend, neighbour or family member. There may also be additional requirements in respect of keeping your house secure, as well as in respect to turning off the mains water to prevent extensive damage.

Unoccupied Properties and Let Properties

If your home is not being lived in, or you are renting it out to tenants, then there are specialist insurance policies available that are better suited to your requirements. Therefore you shouldn’t arrange home insurance stating that you and your family live in it.

The advantage of buying the right policy for the occupancy of a property is that the product is better tailored to your own requirements. For example you may be able to claim for loss of rent if your let property can’t be used while it is repaired, or taking off frozen food cover on a property that isn’t lived in, reducing the overall cost of the policy somewhat.

Need some more information?

Why not read one of our other buildings and contents insurance guides?

Back