What Level of Home Insurance Do You Need?
A combined home insurance policy covers both buildings and contents insurance. Buildings insurance covers the structure of the house whilst contents insurance covers
items within your property such as electronics and furniture. Depending on your circumstances you may only wish to purchase these policies independently. For example a landlord may only want buildings insurance whereas a tenant will only want to take out contents insurance. The majority of homeowners opt for an all-in-one home insurance package as it tends to be more cost-effective.The level of cover you will require will depend on numerous factors including the cost of your property, the total value of items in your home as well as external factors that could increase/decrease the risk of you having to make a claim.
High Value Insurance
If your home would cost more than £400,000 to rebuild then you should look at high value home insurance cover. Similarly, if you have lots of expensive possessions such as rare antiques, fine art and jewellery then this level of home insurance will give you peace of mind that you will be fully compensated should the worst happen.
New for Old or Indemnity Cover
If you are taking out standard home insurance then you should consider whether you want new for old cover or indemnity cover. The latter is the cheaper option and takes into account depreciation and wear and tear when valuing the cost of repair or replacement. It's recommended that if you have expensive items which are prone to depreciation then consider old for new cover.
Accidental Damage
You should also consider whether you want to take out accidental damage cover. This additional level of home insurance cover adds further protection to your property and possessions. It will increase your premium but does give you peace of mind that you are covered for any eventuality. It should be noted that most high value home insurance policies include accidental damage cover as standard.
Insure for the Right Amount
Ultimately, when deciding on what level of home insurance you require you should look at the 'sum insured' figure. This is the maximum amount for which you could potentially make a claim. You will get a separate figure, one for the building and one for the contents. Ensure that this figure is equal to estimated cost of rebuilding your home or replacing or repairing your possessions. Determining the right level of cover for your buildings insurance will based on a valuation of your property. Your contents value will either be determined by yourself or through a bedroom policy which bases a value on the number of rooms you have. If you over-estimate then you may end up paying for the wrong level of cover, likewise, if you under-valuate then you could end up being underinsured.
DISCLAIMER: All content is for guidance only and does not constitute individual financial advice.
www.homeinsuranceinfo.co.uk is not authorised by the FSA to advise on insurance matters.
