When you are buying a new home, you must have insurance to cover the structure of the property. This is not just for peace of mind either, as most lenders use whether you have insurance or not to decide if they will offer you a mortgage. If you’ve rented up until now, this type of insurance will probably be new to you. In general, buildings insurance will include cover against:
● Storm and flood damage
● Burst pipes
● Fallen trees
But remember, all insurance providers are different, so check the small-print before choosing a policy.Most insurance providers will offer add-ons for your buildings cover, including accidental damage and legal expenses. You’ll also need to know what’s not
covered, which may include general wear and tear, and any damage that occurs during a time when the house is unoccupied for 30 consecutive days or longer.
The amount of cover, and the excess, will depend on your policy. You should have enough cover to rebuild your home if it’s completely damaged, which can be tricky to calculate. The Association of British Insurers has a helpful online tool
, which is useful as a starting point. It’s worth getting this just right, so you have adequate cover but don’t pay over the odds for your policy. It’s also a good idea to update the rebuild cost over the years, to take insurance and price changes into account.
Contents insurance covers the possessions in your home. If your house is burgled or contents become damaged through fire, for example, your insurance policy should cover the cost, depending on the specific terms.
Before taking out your contents insurance policy for your new home, start by making a list of the items in your house. This should include electrical devices, jewellery, and even carpets, clothes and items in your garden shed, along with an estimated cost per item. In most cases, contents insurance has a ‘single item’ limit, so bear this in mind when choosing a provider.
When you choose a policy, you can opt for ‘new for old’, where your insurer pays out the value of a new item if your existing one is damaged. Alternatively, indemnity policies, which are forms of insurance that can be used to “fix” legal issues during the sale of a property, are generally cheaper.
However, they take depreciation and wear and tear into consideration when valuing your items, so you’ll only get the current market value. Additional cover is usually available for accidental damage and personal possessions, such as your smartphone when you’re out and about.
To get the best home insurance policy, you can:
● Shop around and use impartial online comparison services
● Take extra security steps to protect and secure your new home. Installing security lights, a visible burglar alarm and CCTV cameras can reduce your premiums and the chance of burglary
● Homeowners should consider joint buildings and contents cover as it’s the most cost-effective option. It covers both structural damage and stolen or damaged valuables and possessions
● Increase your voluntary excess, but make sure you weigh up the pros and cons of doing so first. Voluntary excess is chosen by you in addition to compulsory excess and can be set as low as zero. This reduces how much you will have to pay out when you make a claim.
In addition to our home insurance guide, make sure you get advice from friends, family and impartial online resources before making a decision.