The two main types of home insurance, buildings and contents, cover you for different things. Buildings insurance is there to cover the cost of any repairs or rebuilding work concerning the physical structure of your property as well as its fixtures and fittings, whereas contents insurance protects you against theft or any serious damage occurring to the possessions that you keep in your home, and it may also cover you for public liability. How much you need of each type of insurance depends on a number of variables, but in both cases it is important that you make sure that you are neither under- nor over-insured.
Getting the right amount of buildings insurance
If you are over-insured, it means that you are paying too much on your premiums. In the case of buildings insurance, it might be that your coverage also includes features that your property does not actually possess. You don’t want to find yourself paying for the coverage of a garage or driveway if your home doesn’t actually have one.
Being under-insured on your buildings insurance could end up being more serious, however. When it comes to insuring the structure of your property, you must make sure that in the event of your home being destroyed, perhaps by fire, you will get enough money back to cover the full costs of the reconstruction as well as to pay for your alternative living arrangements in the interim. In such an instance, not having enough insurance because you underpaid on your premiums could lead to very troubling circumstances for you and your family.
It is important to remember that you don’t need to insure your property for its market value. Because you will still own the land, regardless of what happens to the physical structure, you only need to get coverage for the cost of re-building the property from scratch.
However, if you live in a particular architectural type of building, such as a period house, make sure the coverage will be high enough to pay for a specialised building project.
Also, don’t forget to adjust the your cover if you add an extension to your home. A house extension will increase the value of your property, and as a result, it is necessary to increase your buildings insurance coverage to allow for this fact.
Making sure your possessions are fully covered
When it comes to contents insurance, the most important thing is not to make the mistake of underestimating the total value of your possessions. Under-insuring on contents insurance could leave you having to make do with fewer possessions, perhaps of a lower quality or standard. When getting contents insurance, it’s a good idea to make a list of everything you possess, room by room, and to make a note of the value of the item as new. This way, you will be able to build up a more accurate amount that should be covered by your contents insurance.
For more advice, and useful value calculators for both buildings and contents insurance, see the website of the Association of British Insurers at http://abi.bcis.co.uk