Do you need home insurance?
Regardless of whether you have a mortgage or not, if you own your own home you’ll need some sort of home insurance just in case it gets damaged or needs a repair. If you’re a landlord, it’s important to note that it’s actually your responsibility to have it… not your tenants’.
So, what is home insurance?
The term home insurance is actually a generic term that covers to very different types of insurance. Namely:
Buildings insurance – which covers damage to your building eg. walls, the roof etc, as well as permanent fixtures and fittings in kitchens and bathrooms.
Contents insurance – which covers items in your home, like furniture, electrical goods like fridges and TVs, personal belongings and some types of flooring including carpets
It’s important to note that you can get separate policies from different insurance companies if you wish, but people often actually prefer to take out a joint policy.
So, what does buildings insurance cover?
The purpose of buildings insurance is to provide cover for the cost of repairing or rebuilding your home if it’s damaged. The details will vary from policy to policy, so you do need to read the small print carefully, but on the whole you will be covered in the event your home is damaged by:
- Storms and floods
- Fire and smoke damage
- Falling trees
- Water damage from leaking pipes
If you need cover for your garage, fences and other outside structures, check with your financial adviser which providers offer insurance for this.
But what does buildings insurance not cover?
For a start, general wear and tear is not covered. Depending on the provider, you might find that frost damage and damage from leaking gutters isn’t covered either. Storm damage to fences and gates is often excluded, as are many other things – so check your policy carefully.
It’s also worth noting that many policies will not cover you if the property is left unoccupied for more than 60 days (though that may be as little as 30 days with some providers). If you know there will be periods time when you’ll be away and the property is empty, then it’s worth speaking to your insurance company to see if they do provide separate cover for this.
So, do you need buildings insurance?
If you have a mortgage, your mortgage company will require you to have buildings insurance. If you rent out a property, you will need to have it as it’s your responsibility to maintain the building as a landlord. But it really is sensible to have buildings insurance even if neither of those things apply. Your home is often the biggest investment you make in your life and if it’s not covered by insurance and disaster strikes… you may find yourself facing a big bill.
If you own the leasehold to a flat, you’ll need to check whether the freehold owner has the responsibility to take out cover or not. Your solicitor will be able to advise you on this. If the leaseholders of a block of flats jointly own the freehold too, then buildings insurance will need to be arranged by the group.
If you’re a tenant, you won’t need to worry about buildings insurance, but you may want to consider taking out home contents insurance cover.
What should I watch out for?
As with any insurance policy, take advice from an adviser before taking out home insurance. There may be unusual aspects to your property that need to be treated differently, and with insurers adding more and more exclusions as time goes by you need to make sure you get the right cover.
Excess limits are also something to watch out for. Often subsidence has an excess as high as £1,000. Plus, flooding in the area may have an impact on this too. The key is to take advice before you buy.
One final point… make sure you’re not underinsured. This can be very costly in the event of a disaster. Your adviser is the best person to discuss this with to make sure you have the level of cover you need.
Other types of insurance to consider…
If you’re interested in finding out more about the different types of insurance available to you, click the links below: