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12 Oct 2018

Home Insurance Basics

Once you’ve found your mortgage and your dream home, it’s not the end of your house purchase journey. Now you’re going to need something else – home insurance. Yes, you're going to need to pay out for a few more things after your house buying process is complete. One of those is home insurance.

But, why do you need it? You may be thinking ‘what’s the point’. Well, we’re here to tell you why it’s so important. Because, let’s face it, you’re going to need home insurance when you buy your property. So, there’s no time like the present to learn about it! If you’re looking to learn all about home insurance, look no further, you’re in the right place.

Let’s dive in.

What is Home Insurance?

Home insurance can usually be split into two parts: building's and content's insurance. As you may be able to guess, building's insurance covers your actual house. The foundations, walls, ceilings and everything in between. As for contents, it is cover for the things inside your home. Things like your sofa, TV, iron, laptop and all the rest. You’ll need both when you have your home.

But, it’s not actually the law. Unlike car insurance, you are not legally required to have your home insured. However, it’s a good idea (and most lenders will make this one of their compulsory requirements). We’re going to go into detail of both parts, below.

Buildings Insurance

So, most building insurance policies will cover damage to your home from fire, flood, storm, subsidence, falling trees, burst pipes and theft – although, extra cover is available. But, your standard home insurance should cover these listed above (some may exclude storm damage). However, there are some things that buildings insurance will not pay out for. Damage from wear and tear isn’t covered by most buildings insurance policies, neither is damage from acts of war or terrorism.

It’s key to make sure you read your home insurance agreement, even the small print, so you know what you’re getting as part of your policy. Like we said, building's insurance is not a legal requirement, but some lenders will insist you have adequate cover, as technically they own the house until your mortgage is paid off – they don’t want their investment put at risk.

A key thing that you should look into when taking out Building's insurance is if you’re covered for Trace and Access. So, we mentioned above covering your home against burst pipes, but one thing that not all policies provide is covering the work for tracing the burst pipe and accessing it in order to make relevant repairs. Many homeowners don’t consider this, as the costs of removing carpet, flooring and tiles can really stack up. If you don’t have sufficient Trace and Access cover as part of your policy, then you should. It is one of the top things that is claimed on home insurance in the UK the most, so not all providers cover it as standard in their policy. Find yourself one that covers you for Trace and Access for a minimum of £5,000 cover.

Your building's insurance cost is dependent on the size of your home and the level of cover you take out – bigger home, more costly insurance. However, your insurance covers you for rebuild cost not the cost of your property purchase price/value. So, it’s key to make sure you assess the cost of rebuilding your home, so you know if your insurance cover is correct. Next up is contents insurance.

Contents Insurance

The best way to describe contents insurance is if you were to pick your house up, take the roof off and turn it upside down, everything that falls out is covered under contents insurance. So, your TV, laptop, furniture and the rest of the stuff that isn’t fitted is covered by contents. Again, you don’t NEED contents insurance, but it’s a good idea you have it. It protects you against damage or loss of contents from fires, floods, storms, water leaks (burst pipes) and theft – it also protects against explosions and earthquakes too (not that the latter is common in Britain, but you never know…).

It’s important to know the true value of everything in your home, as you need to make sure you have the right cover should anything happen. You need to make sure your insurer is aware of any valuable single items, because these need to be accounted for. Most insurers have single item value limits, and if one of your items exceeds this value, and you haven’t informed your insurer, you may not be able to claim this on contents.

You should look into Personal Possessions cover too, as part of your content’s insurance. Yes, it’s an additional part, but one that is vital. It protects the items you take out of your home, whilst they’re on your person. So, your phone, laptop, tablet are all covered out of the house if you have personal possessions cover on as part of your contents insurance. What you’re not covered against, unless you have personal possessions cover, is if your contents are damaged or stolen outside of the home. So, make sure you have personal possessions cover as part of your contents insurance!

Accidental Damage

Another one of the top claims in the UK, next to Trace and Access, is accidental damage. And, annoyingly, accidental damage cover is not covered as part of standard insurance policies. But, accidents happen, like spilling red wine on cream carpets or drilling through a wall to split a water pipe. If you want to be covered against things like this, find a policy that offers Accidental Damage cover as well.

How can MO help?

The Mortgages.Online team are working hard to build in building's (see what we did there?) and contents insurance to our upfront service. At the moment, we offer mortgages and life insurance upfront (and can provide you with a home insurance quote later on, but over the coming months we’re set to expand further. Part of our service at MO is to compare mortgages and find the one that is ideal for you – based on the information you’ve provided. So, this carries over to our life insurance quotes too as well as, in the future, for our buildings and contents quotes.

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Laura Waller.

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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