Home Insurance? Why is it Important?

Home insurance serves as a protection for your property should the worst occur. There are two types of home insurance, buildings insurance and contents insurance.

Building insurance - This will indemnify against any damage which occurs to the physical property and will compensate for any repairs or rebuilding costs.

Contents insurance - This will protect against damage or loss to your possessions contained within the property.

Is this a legal requirement?

Legally speaking there is no requirement but lenders tend to insist on buildings insurance should you purchase with a mortgage. This is in the event your property suffers any lose, their interest will remain protected.

Who arranges insurance?

The homeowner is responsible for all insurance unless the property is leasehold. Where the property is leasehold, then the freeholder is responsible for arranging the policy.

We always recommend obtaining insurance, even if not necessary. Your property is usually the biggest asset you have and it is worth ensuring it is protected. Should damage occur to your property and there is no valid insurance in place, it may be very expensive to make repairs.

If you have contents insurance, it is a safe means of protecting any valuable possessions you may have within your property. Given the rise of commercialism, the increase of valuable possessions per household has skyrocketed and therefore it is worth considering if you own high value goods.

What is covered?

Insurance policies vary between different insurers and it is important to peruse the terms and conditions of your policy before confirming acceptance.

Buildings insurance - This protects against any damage to the actual structure of the property. This also extends to fixtures and fittings which differ to contents. Fixtures and fittings are items which are fixated to the property such as showers and radiators. A building insurance policy will cover fire, weather damage, smoke damage, vehicular damage and any criminal activity. Building insurance also protects again subsidence and damage to pipes. The building insurance will cover the costs for repairing your property for the value of the damage.

Contrasts insurance - This will cover all your possessions contained within the property. This extends to anything which is not a fixture or fitting such as jewellery, electronics or furniture. For an additional fee, it may be possible to also include bikes and mobile phones also. The insurance will protect against loss to fire, burglary or damage. Contents are usually valued on the estimate for them to be replaced as new or at current market value if unavailable to purchase.

Are there any exceptions?

Frost damage is commonly excluded, if you wish for this to be included it may be worth obtaining a bespoke quote.

Acts of God - More commonly referred to as natural disasters such as earthquakes.

Floods - if the property is contained within an area which is prone to flooding, it is usually quite difficult to find a lender who will indemnify the risk.

Usually if the property is in an area where there is a particular higher risk posed, the risk in question will be difficult or more expensive to insure against.

Some properties are not covered by high street insurers and therefore specific insurers or brokers need to be consulted to obtain these which also normally tends to be more expensive. The properties which are usually inclusive are:

* Listed buildings

* Ex-council property

* Block of flats

* Other e.g. lighthouses or farms

When should insurance be obtained?

This should usually be in place at exchange of contracts as per the instructions of most lenders. If you have no lender, we still recommend obtaining insurance.

Are policies expensive?

Insurance premiums vary and are dependant upon a number of factors which include property value, property location, claim history, security of property and the number of occupiers within the property.

Property can be valued by a surveyor who will be able to confirm an estimate cost for any cost of rebuilding.

The best way to value the contents is to make a list on a room by room basis of all the items contained within and the fee for replacement. This would be totalled and serve as a benchmark figure.

How is a claim made?

There may be certain requirements contained within your insurance policy which need to be adhered to before you can make a successful claim. Examples of this include:

• Ensuring the doors and windows are locked securely

• The property is not left vacant for a lengthy period of time, usually 45 days but may vary from lender to lender

• The use of a functioning burglar alarm

• Reporting any criminal damage to the police

How do I obtain the best quote?

It is always worth obtaining quotes from multiple insurers as you may save a substantial amount in the long term. It is worth obtaining three quotes with similar conditions and proceeding with the best. Whilst price comparison websites are helpful, contacting lenders directly may give you access to the best quote.

Many insurers offer particularly low premiums as a means of luring customers from their current insurers. If you are able, it may be worth regularly changing insurers every couple years to obtain better quotes as time passes.

If all else fails and your property requires a specialist insurance, please consult a home insurance broker.

When obtaining a policy, please confirm you are satisfied with the insurance fee and the excess. The excess is the cost of making a claim. Usually the higher the policy, the lower the excess and vice-versa. It is important to distinguish your preference.

Do not be obliged to proceed with an insurance company you have been recommended to by either your lender or mortgage broker, they are usually receiving a commission fee.

Before confirming the purchase of any policy, the first step is to ensure that the insurers are reputable and are governed by the FSA.

If you need any further information, please free to contact us.