Home insurance explained

If you’re taking out home insurance for the first time, then the process can seem confusing. In all likelihood, you will need both buildings and contents insurance for your house – but should you buy these as individual components or as part of a combined policy, and exactly what will each component cover?

Buildings insurance

Building insurance sounds straightforward, but it often covers more than just the main building. Outbuildings and garages can be included, as can anything from gates and fences to drives and swimming pools. Bear in mind that there are often many exclusions that apply to these optional extras – gates, for instance, are rarely covered for storm or flood damage. On the other hand, your insurance will almost certainly protect your main home against heavy storms, floods and subsistence, as well as fire, smoke, lightening, theft, vandalism and falling trees.

Most insurers will ask you to pay a £50 excess for claim, although increased risk comes hand in hand with an increased excess. You can ask for a higher excess in order to secure a lower premium – if you wouldn’t claim for damage worth less than £100 it makes sense to up your policy excess.

When calculating how much to insure your property for, bear in mind that the final sum should be the rebuild cost, not how much it’s worth. Home owners frequently over-insure themselves through failing to take this fact into account. You can get an accurate rebuild valuation for free from the Building Cost Information Service (BCIS) or by paying a small sum to a chartered surveyor. 

Contents insurance

As you might expect, contents insurance applies to the belongings you keep in your home. This can be anything from obvious valuables – TVs, DVDs players, and stereos – to more mundane items like clothes, CDs and even books. Bear in mind when taking out contents insurance that you will often have to pay more to cover cash and credit cards. 

It’s important to accurately calculate the value of your possessions in order to get the right policy for you. Start by making a room-to-room inventory, listing everything that you want covered and working out its proper value. Consider the indoors as well as the outdoors, and don’t forget that your policy will need to be corrected year-on-year as the value of your home contents change. Don’t forget to include the indoors as well as the outdoors in your value assessment – garden and patio equipment is easy to steal and can be just as valuable as indoor furniture. 

For both buildings and contents insurance, find the cheapest option for you by shopping around on price comparison sites, or by contacting an insurer like Legal and General direct and asking them for a quote. You should also check to see if you can secure a cheaper premium by taking out a combined policy.