Buildings Insurance
If you have a mortgage, your lender will insist that your property (and their security) is protected by buildings insurance. It usually pays out if your property is destroyed by fire, floods or subsidence (although you will need to check if you live on a flood plain, for example). Damage to fixed fittings such as baths and kitchens are often included, as well as sheds, greenhouses and garages.
You might be offered buildings insurance when you take out your mortgage, but you don’t have to take what’s on offer. Use the key policy information to shop around and get the best deal for you.
If you purchase a leasehold property (such as a flat in a block of flats) the freeholder may have arranged buildings insurance for the whole block, in which case you may not need your own buildings policy.
Contents Insurance
It covers the loss of or damage to the contents of your home. This includes your furniture, electrical goods and other items within your home. Some policies cover you for items you take outside, for example cameras, jewellery and briefcases. Different policies offer different levels of cover but generally you’ll be covered against theft and fire, and have the option to insure against damage you may cause by accident. It is always vital that you thoroughly read and understand the full policy terms and conditions.
Keeping costs down
As always, shop around. You may also find that you get a better deal if you buy buildings and contents insurance together. Most policies have a standard excess charge which means you agree to pay the first part of any claim, for example the first £50 or £100. If you agree to pay a higher excess you might get a cheaper policy. Always compare what’s covered by a policy, not just the price – the key policy information will help you do this. Some might be cheaper than others, but they may not offer the same level of protection.