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Home insurance

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If you own your own home you should have home insurance. It comes in two different types, which are generally referred to individually as they cover different things.

Buildings insurance

The first type is buildings insurance, and as the name suggests this covers the actual building itself. So if anything were to happen to cause damage to the fabric of your home – such as a fire or a flood for example – your buildings insurance will cover the cost of getting your home repaired so you can live in it again.

Contents insurance

In contrast, contents insurance covers the items inside your home. The best way to focus on what this covers is to think of everything that isn’t actually built into your home. For example a fitted kitchen would be covered under buildings insurance, but your microwave and fridge freezer would be covered under contents insurance.

What are you covered for?

One of the most important things to bear in mind in this situation is the amount you are covered for, and what it actually covers. For example many people believe buildings insurance should cover the same amount as the value of the house. However this is not the case. It should actually cover the amount it would cost you to rebuild the house from the foundations up. This can actually be a smaller amount than you might think, giving you a potentially cheaper insurance policy as a result.

The other thing to bear in mind is the importance of reading any home insurance policy before you go ahead and take it out. For example, if you are looking into buildings insurance, make sure you know whether or not external items such as sheds and other outbuildings are included in it. Don’t just assume they are – make sure you know and get the policy amended to reflect it if you need any changes to be made.

The same applies if you wish to get contents insurance. Make sure the amount you are covered for accurately represents the contents of your home. Some people are vastly underinsured, particularly where gadgets, computers and jewellery are concerned. Check and see whether you have the cover you need.

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