HOME AND CONTENTS INSURANCE UNCOVERED
YOUR GUIDE TO HOME & CONTENTS INSURANCE
A home is more than just bricks and mortar; it’s the result of years of hard work; a place where memories are created and a home for valuable and treasured possessions.
Searching for the right insurance for your home may feel like a chore, but it’s worth remembering how important it is to have the right policy in place.
If you’re a homeowner, your home is likely to be your single largest financial asset. And regardless of whether you own your home or not, you’ll want to be sure your belongings are properly covered if you ever need to make a claim.
This website covers what you need to know when buying home insurance. It also explains how Your Free Mortgage Adviser can help you through the process.
WHAT IS HOME INSURANCE?
THERE ARE TWO MAIN TYPES OF HOME INSURANCE
This covers the building itself against things like fire or flood. It will also cover permanent or fitted fixtures and fittings in your home and garden, and any outbuildings that form part of your home. If you own your home, buildings
insurance is absolutely essential.
If you have a mortgage, your lender will almost certainly demand you have a policy in place as a condition of your loan.
Contents insurance protects your household goods and personal possessions, such as electrical goods, jewellery, clothes and furniture.
You can add various options to your contents insurance that will provide additional cover. Two common enhancements are accidental damage cover and cover for possessions outside of the home. Some insurers include these additional options
If you are renting a property, you probably won’t need buildings insurance (as this will be the responsibility of the property owner), but you will need contents insurance.
As well as offering standalone contents insurance, most insurers offer ‘combined’ policies that also include buildings cover. This is usually the most convenient and cost-effective way to buy your home insurance if you need both types of cover.
GETTING THE RIGHT COVER FOR YOU
The things that make your home different from your neighbour’s are often crucial in determining the right cover for you. When selecting the most appropriate policy, you’ll need to consider things like policy excesses, the level of cover you’ll need and the merits of adding extra features.
HOW MUCH COVER WILL I NEED?
The sum you are insured for should be sufficient to cover the full cost of rebuilding your property.
Different insurers will have different ways of calculating rebuild costs. Some will ask you for the amount stated on your home survey, while others will calculate the amount based on the number of bedrooms you have and the information you’ve provided.
Most policies will have a standard level of cover, for example £300,000, although some policies go further, offering ‘unlimited’ cover. It’s worth stressing that your rebuilding cost is not the same as the market value of your property.
- If your insurer automatically calculates your cover level, make sure you disclose anything unusual about your home, such as its age, construction (eg. thatched roof), or any outbuildings.
- If you extend or make any alterations to your property, tell your insurer. If you don’t you run the risk of being underinsured.
Most insurers will offer a standard level of cover, usually between £30,000 and £50,000. This will be sufficient for most households, but it’s important not to underestimate the value of your possessions.
- Consider the cost of replacing all of your clothes, gadgets and even things like children’s toys. Don’t forget your digital music and video downloads.
- Calculate the cost of your hobbies (music systems, camera equipment, golf clubs, fishing rods, stamp collection etc).
- Walk around your home and estimate the cost of replacing everything on a ‘new’ basis. Don’t forget things that may be hidden away in cupboards, or in the attic.
- Have you got any expensive items associated with your pets, such as a kennel or tropical aquarium? Remember to include these too.
WILL I BE COVERED FOR ACCIDENTS?
The majority of contents insurance policies will cover you for the consequences of specific events automatically, such as flood and fire. But not all will include ‘accidental damage’ as standard.
Accidental damage will cover you if you spill paint on your carpet, break an ornament, or put your foot through the ceiling whilst clambering around in the loft! At some point or another, most households suffer this type of mishap, so you may decide it’s a feature you can’t do without.
WHAT ABOUT MY PORTABLE POSSESSIONS?
If you take valuable items away from your home regularly, you should consider personal possessions cover (sometimes referred to as ‘all risks’ cover). When you go abroad you may want to take your favourite gadgets, clothes, watches and jewellery with you. On the whole, these wouldn't be covered under a standard contents policy unless you specifically select ‘worldwide cover’.
- If you have children heading off to university, you should check whether or not your policy automatically covers them for the possessions they take with them.
SHOULD I INSURE MY VALUABLES SEPARATELY?
There are two types of personal possessions: specified and unspecified. Unspecified possessions will be covered up to a specific limit. But, if you have items worth more, you should declare each item individually (making them ‘specified possessions’) to ensure they are covered.
WHAT ABOUT FLOODING?
Flooding is a massive issue for many parts of the UK and can be a nightmare for homeowners who either don’t have any cover, or have the wrong level of cover.
SHOULD I TAKE OUT LEGAL EXPENSES?
Arguments with neighbours over boundaries; waiters refusing to accept responsibility for spilling food over your favourite leather jacket; shops refusing to take faulty items back – these are everyday disputes that could result in legal bills.
The cost of defending or pursuing a legal case could soon mount up and most home policies usually provide the option of adding legal expenses cover (including over the phone legal advice) for a small additional premium. Terms and conditions will apply and vary between policies.
WHAT ABOUT EXCESSES?
An excess is the first part of any claim that you have to pay. Most policies have a standard excess, but it’s worth checking exactly the level being offered before you buy.
- The excess for subsidence claims is likely to be higher than the excess on other claims.
- Increasing your excess is a good way of reducing your premium. Make sure your excess amount payable is right for you.
WHAT ISN’T COVERED?
If you leave your property unattended for a long period of time (in most cases more than 60 days), your insurance may not be valid – particularly for damage caused by things like water leaks. Other common exclusions include damage caused by war or acts of terrorism, and damage to gates and fences caused by storms or floods.
WHAT ELSE DO I NEED TO KNOW?
WHO’S THE INSURER?
Take the time to check out who you’re being insured by:
- Have you heard of them?
- Are they a household name?
- Are you confident they will be there for you when you need them?
The 2007 floods really sorted out the serious insurers from those who couldn’t cope with a rapid increase in serious claims. The larger insurers will have call centres, large numbers of claims handlers and access to the network of tradespeople needed to help deal with a major claims event.
As we’ve seen from the recent banking crisis, a financially strong insurer is also important, so do think twice about buying cover from a little-known insurer.
QUALITY VERSUS COST
Try to remember the old adage: ‘you get what you pay for’. It might be tempting to go with the cheapest premium you can find, but are you confident you will have the right level of cover? Will your insurer be there when you need them? If you’re unfortunate enough to have to claim on your insurance, the last thing you’ll want is a nasty surprise when you contact your insurer.
HELPLINES AND HOME EMERGENCY SERVICES
All insurers will give you a claims helpline number so you can report your claim, but it’s important to check exactly what you’re getting:
- Is the claims line 24 hours?
- Does the insurer have a network of tradespeople in place?
The claim is the ‘moment of truth’ and you should check what you can expect from your insurer in advance.
Some policies will offer the option of buying ‘Home Emergency Service’ cover. You may have been approached by your utility provider on numerous occasions to take out a similar, standalone policy. It will cover you for a specified amount towards repairs to your boiler or plumbing system. As such, it offers valuable cover, but it may work out cheaper to add it to your home insurance as an additional option (rather than purchasing it as a standalone policy).
HOW CAN YOUR OPENWORK ADVISER HELP?
YOUR ADVISER IS A MEMBER OF OPENWORK, ONE OF THE LARGEST FINANCIAL ADVICE NETWORKS IN THE UK
Openwork believe in the value of personalised advice. Advisers are trained to the highest standard and the quality of advice they provide is constantly assessed.
Openwork has partnered with Paymentshield, whose Home Insurance product is underwritten by a panel of leading insurers, including Legal & General, Royal Sun Alliance, Aviva, Ageas, Axa and Allianz.
Paymentshield has over 20 years’ experience and deals only through intermediaries. Thanks to Openwork's partnership, you can access competitive products that provide the right level of cover for your home and contents.
Damage arising as a result of an accident, eg. paint spill on a carpet.
A person who investigates and assesses claims on behalf of insurers.
Designed to give financial protection should you need to repair or rebuild your home as a result of insured events.
An application to an insurance company to compensate you for a loss.
Provides protection for the cost of replacing, repairing or reinstating your possessions following loss or damage inside the home.
The items your insurance policy protects and the risks it protects them from.
Written notification from the insurer of a change of wording or cover.
The first part of the amount of any claim, which is paid by you, the policyholder.
A specified property, person or event that the policy does not cover.
The extra items or events that you can pay to include in your insurance policy.
An upward motion or horizontal displacement caused by faulting of rock masses.
Policies where the sum insured is automatically adjusted in line with the rises in inflation.
INSURANCE PREMIUM TAX
A government tax imposed on most insurance premiums.
A downward slip or movement of a mass of rock, earth or artificial fill.
LEGAL EXPENSES COVER
Covers solicitors’ fees and expenses, the cost of barristers and witnesses, court costs and opponents costs if the ruling is awarded against the insured.
Gives financial protection if you are found legally liable for injury or damage to a third party or their property.
The maximum amount an insurance company will pay out for a certain type of item, such as jewellery. These limits are always explained in your policy.
Where an event has occurred that has resulted in damage to something, or its loss of use. You may not be insured for all losses or you may have chosen not to make an insurance claim, even though it was insured.
NEW FOR OLD
Where insurers agree to pay the cost of property lost, damaged or destroyed without deduction. This is sometimes called ‘as new’ cover. The alternative to new for old is indemnity cover, which takes account of wear and tear.
Items that belong to you for which you are legally responsible, and which are used for mainly private purposes. Also known as Personal Belongings.
The amount paid by the policyholder to the insurer for insurance.
The sum insured on your property to cover the full rebuilding costs of a property. This is not the same as the market value of your property.
Continuing the insurance from one year to the next.
The date your policy expires, or the date you must renew your policy by to maintain continuous cover.
The part of a policy document containing information about the cover provided as well as any terms and limitations.
A gradual sinking to a lower level or the sudden collapse of something into a hollow beneath it.
The maximum amount you could be paid under your policy. You need to make sure this is enough to replace your possessions (for contents insurance) or rebuild your home (for buildings insurance).