Knowing that your home is protected by a comprehensive insurance policy is great for putting your mind at rest, but do you really understand what you’re paying for? Many homeowners and renters choose home insurance at the request of their mortgage provider or landlord and haven’t taken the time to look at the facts.
Insurance policies that protect against theft, fire, structural damage and accidents and emergencies in the home can become extremely valuable should the unexpected happen. Understand the various different policies available, what kind of cover they will provide and whether you really need them.
Insurance requirements in the home
In the UK, you are not legally required to take out cover for your home, although you may have been required to take out a policy when arranging a mortgage. A short and snappy list from Risk Heads has a good guide to compulsory insurance. Most lenders insist that when you apply for a home loan, you also take out insurance policies that will reduce risks for them, such as building insurance or a payment protection policy. The Home.co.uk website has a handy guide to insurance when buying a home which explains some of the most common mortgage requirements.
Once you’ve successfully bought a home, there is nothing to say that you need to continue to pay your insurance premiums. While you will have take your policy out for a particular period of time, you can choose to let it lapse when your contract ends. This is entirely your choice, but it is generally advisable to keep paying insurance if you wouldn’t be able to afford to cover the loss you’d face if the worst happened. This is especially true now that there are new insurance laws to protect claimants and help you get the cover you deserve.
Types of home insurance
The main types of insurance available for the home include building insurance, which covers structural damage caused by fires, burst pipes and similar problems and contents insurance, which protects the possessions you have within your home. Check out Staysure’s guide to home insurance for a more in depth look at the differences between the two. Aviva also has a very useful list of common insurance questions, which highlights some of the surprising things that are or aren’t covered by the average home insurance policy.
To be sure you’re getting the amount of cover you need for the lowest price possible, it’s always worth comparing quotes with a site such as Money Saving Expert, where you’ll also find some top tips for cutting your premium costs.
Understanding what home insurance is and how it works is one thing, being able to decipher the wording of your policy is another. Most agreements make liberal use of legalese and complicated sounding terms so having a look at Moneysupermarket’s insurance jargon buster or spending some time reading Nationwide’s home insurance glossary can really help you get to grips with what’s on offer.
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