Home Insurance Cover

Although you can purchase each type of insurance separately, a single home insurance policy will usually include both buildings and contents insurance. Buildings insurance protects the physical structure of the house, such as the roof and walls, whilst contents insurance covers the items within your home, such as furniture and electrical appliances. Whether you choose to purchase each cover separately will depend on your circumstances. For example, if you are the landlord of a property and do not have any items of value within the house, you may consider contents insurance an unnecessary expense.

A standard home insurance policy protects your property's structure and contents against loss or damage. This may occur due to: fire, smoke, lightning, storm, flood, earthquake, explosion, burst water or oil or gas pipes, riot, civil commotion and theft. In addition, you are also covered for loss or damage to your building as a result of a 'foreign object' colliding with it. A foreign object is anything that was travelling outside of your home before the collision occurred, such as a car, an aeroplane or a falling tree. There are certain incidents which will usually not be covered: these are explained in Amendments & Exclusions.


Fire and Smoke

Fire and smoke can cause damage to or destroy your building, as well as its contents. Home insurance covers you for any loss or damage as a result of fire, whether or not this was caused by you accidentally, or was the result of a faulty electrical appliance or lightning, for example. In order to minimise the risk that you will need to make a claim, your insurer may insist that you install at least one smoke alarm on each level of your property. If this is a condition of your policy, you must do this. Failure to do so could invalidate a future claim.


Flooding

Certain UK regions are more susceptible to flooding than others. Latest figures from the Association of British Insurers (ABI) suggest that around ten percent of properties in the UK are at risk from flooding. If your property is located in a high risk area, your insurer may refuse to offer you comprehensive cover. The UK is one of the only countries in Europe where flooding is a basic component of any home insurance policy, but do not assume that you are sufficiently covered.

As the risk from flooding increases, insurers are offering customers a more comprehensive level of protection via specialised flood insurance. Flooding can occur when the level of coastal or inland waters rises unexpectedly, as well as when sewers are damaged or urban drainage fails. Your insurer may insist that you help to protect your property against flood damage by following certain guidelines, especially if the property is at risk. These guidelines may include measures such as tiling the ground floor of your home rather than fitting wall to wall carpets, and replacing any wooden doors and window frames with water-resistant alternatives.

The UK's Environment Agency provides useful advice on how to address the dangers of flooding, including what measures you should take to reduce the risk of damage or loss. Advice includes preparing an emergency kit with food, clothes and important documents, and considering the specific items you would wish to save if your home was at imminent risk of flooding, such as photo albums. For more details see www.environment-agency.gov.uk/homeandleisure/floods.


Subsidence
Subsidence is a shift in the level of the land on which your property stands. Standard home insurance policies will cover you for damage or loss as a result of subsidence. However, if your property has been repaired in the past for subsidence damage or is at a high risk of subsidence damage in the future, your insurer may refuse to offer you adequate cover. Alternatively, they may cover you but charge you a high premium. Subsidence claims can be very costly, usually because they can take a long time to resolve and may require large changes to your property's structure. Most standard policies have an excess of £1,000 if you make a claim for damage or loss as a result of subsidence. The excess is the amount of money which you must pay yourself when you make a claim.

Many insurance policies will give you money towards the cost of alternative accommodation if your property is considered uninhabitable while repairs or rebuilding work is taking place. This may even include cover for pet accommodation, or loss of rent if you were renting out your property at the time.

You may find that specialised subsidence insurance protects you more comprehensively than a standard policy. Usually subsidence insurance will provide cover designed especially to meet your individual needs, albeit at an increased cost. If your property is at risk of subsidence, it is even more important to shop around for the best quote, because the cost of specialised insurance varies greatly between insurers. A home insurance broker can help you to compare a number of policies and ensure that your property is covered for a reasonable price.

Exclusions to subsidence cover include: inevitable subsidence, such as loss or damage due to coastal or water-related erosion. Nonetheless, policies differ. Ask your insurer if you are unsure as to exactly what level of cover they provide.


Burst / Frozen Water Pipes

Many home insurance policies will cover you against damage or loss as a result of frozen or burst water pipes. However, some basic policies will only cover the cost of plumbing repairs and not the damage or loss caused by burst or frozen water pipes. Ensure that your policy meets your needs. Some types of home insurance, especially those which cover your property even if it is left unoccupied for an extended period of time, will insist that you turn off your water supply or keep your central heating system on a low temperature during the winter months to help prevent burst or frozen pipes. If you have additional emergency assistance cover you may be able to call your insurer for help resolving problems caused by a frozen or burst pipe. For more information see Additional Benefits.


'New for Old'

If you make a claim for loss or damage to items protected under contents insurance, they are usually covered by a 'new for old' policy. This means that if your furniture was damaged in a flood for example, your insurance would pay the costs of replacing it with an equivalent new piece.


Sum Insured

No insurer will cover you for an unlimited amount of damage or loss. The 'sum insured' is the maximum amount for which you could potentially make a claim. Usually, you will have two separate amounts: one for buildings insurance and one for contents insurance.

The sum insured for your buildings insurance should be equal to the estimated cost of rebuilding your home if it were destroyed, for example by fire. If you take out a mortgage on your property, a survey is usually carried out by the lender. This survey should estimate your home's rebuild value. In some cases, your insurer will ask you to provide them just such a surveyor's valuation before they will cover you. Alternatively, some insurers will automatically provide up to £500,000 worth of cover, regardless of your property's exact rebuild value.

For contents insurance, the sum insured should be based on the total value of all the items within your home. Some insurers will expect you to calculate the exact value of the contents, whilst others will automatically provide up to £75,000 worth of cover, irrespective of the exact worth of the contents.

The amount of cover affects the cost of your insurance, so it is in your best interests to ensure that your insurer provides you with the correct amount of cover. If the sum insured is too high, your premium will be expensive and the cover that you pay for will be unnecessary. If the sum insured is too low your insurance will be cheaper, but if you need to make a claim in the future, you may find that your insurance does not cover you as comprehensively as you expected.


Inflation Protection

Because inflation increases the cost of living, some insurers will link the sum insured to a recognised index, such as the Consumer Durables Index or the House Rebuilding Cost Index. This means that your sum insured increases (or decreases) according to changes in the economy. Usually the sum insured is increased (or decreased) monthly or annually. Most insurers will not change the cost of your premium at this time, but may decide to do so if you renew your insurance with them when you existing policy expires.

It is your responsibility to ensure that the sum insured offers you adequate cover. If you purchase new items for your home, or you build an extension to your property, you need to inform your home insurance provider so that they can provide the extra protection necessary.


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