May 2005

New home? What policies do I need?

Home insurance breaks down into two different types- contents and buildings. They will pay out if your belongings or your home are damaged in a variety of ways, be it fire, subsidence, theft or vandalism, flooding and storms.

You can buy a single policy that covers both, but you may be better off treating them as two separate policies, as the cheapest insurer on the property may not be the cheapest on the contents.

Contents Insurance

Contents Insurance is optional but with 808,000 burglaries in England and Wales in the 12 months before December 2004 it may not be a bad idea. Moreover theft is not the only way to lose your possessions.

Contents Insurance covers the possessions inside your house such as the electrical equipment, carpets, curtains, clothing, kitchenware and some valuables. Premiums will be calculated on the type of property and location. Contents insurance policies will pay out in the event of burglary, vandalism, fire, storm and flood.

Insurers usually put a limit on single high value items meaning that particularly valuable items may not be covered by your standard policy. If you have valuable items you may need to add extra cover, or consider a separate policy.

Accidental Damages

Some policies offer accidental damage as a standard but usually you will have to pay extra for it. Accidental damage covers damages caused for example by spilling paint, damages caused by pets or drilling through a pipe. If you are planning any major DIY this may not be a bad idea.

The cost of this additional cover will depend on a variety of factors such as age of the property, post code, age of the policyholder, number of bedrooms type of property.

Building Insurance

Building insurance is often a requirement of your mortgage so that in the event of a disaster, such as a fire, the property can be repaired or rebuilt.

Building insurance covers the structure of your home (roof, walls, windows and so on) as well as permanent fixtures such as built-in kitchens, bathroom suits and out buildings such as garages and garden sheds and any walls, gates and fences. Building Insurance will cover damage or destruction cause by fire, storms, theft, vandalism, escaped water, flooding and subsidence.

Useful Tips

It is worth remembering that installing security measures to your home such as burglar alarms, double-glazing and window locks can significantly reduce your home insurance premium.

If you are looking to work from home you will have to check your policy very carefully. Some insurers automatically cover office equipment up to a certain amount in their standard policy. This is fine if you are working alone from your home computer but if your employment involves specialist equipment, or you employ any one else then you will have to speak to your insurer about specialist cover.

You may want to consider a separate policy for laptop computers; these are particularly tempting to thieves and are frequently taken out of the house. If you have the computer stolen and make a claim, your home insurance premium may increase as a result. Having separate cover will mean that you won't pay more to cover the remainder of your property because you've had something stolen outside your home.

Ref: National Statistics- Crime in England and Wales: Quarterly Update to December 2004