When you NEED to buy home insurance and the exact amount you should spend
Watch our video above on how to always cut insurance costs
HOME insurance can help soften the blow of any damage to your home or items, but it’s worth figuring out exactly what you need before taking out a policy.
Home insurance is not a legal requirement, but it can save you potentially thousands of pounds if you come to need it.
And, if you’re a homeowner, some form of cover may be a condition of your mortgage.
There are two main elements to home insurance – buildings and contents.
Buildings insurance covers the bricks and mortar of your property – the walls, floors and roof. This is usually a requirement from mortgage lenders.
Meanwhile, contents insurance covers everything inside your home that would fall out if it was tipped upside down, such as TVs, fridges and furniture.
You can buy a combined “home insurance” policy, which covers both your contents and the building itself, or you can take out each policy separately.
Depending on whether you are renting, a leaseholder or freeholder, it’s worth figuring out what type of cover is worth your while.
Below, we break down the two different types of home insurance, whether you need to take them out and how much you should expect to pay.
Buildings cover
Buildings insurance tends to cover you following unforeseen events like floods, fire and storms.
It pays out if any damage is done to permanent fixtures in your property too, such as fitted kitchens and bathroom suites.
Confused.com says the average building insurance policy costs £164.64 for a house and £167.48 for a flat.
You don’t have to take out buildings insurance by law, however most lenders will make it a stipulation of giving you a mortgage.
Nathan Blackler, from GoCompare Home insurance, said: “Most mortgage lenders will require that you also take out buildings insurance before you exchange contracts – this is because they will want insurance in place to protect their financial interest in the property.”
Even if you own your home outright and therefore don’t need to repay a lender, it could still be worth taking out buildings insurance so you are covered.
This may be more worthwhile if you live in an older property – although insuring an older home is typically more expensive than a new build.
But what should you do if you are a living in a flat?
It may depend on the tenure.
A “freehold” property is where you own the building and the land it is built on, whereas “leasehold” means you don’t own the land.
If you own a freehold flat or house, it may be worth taking out buildings insurance – often freehold in flats is split between all the residents, so you may want to take out cover together.
But if you are leaseholder, you may find the freeholder is responsible for paying buildings insurance and you pay your share of it through the service charge.
It depends on the condition of your lease though, so you should check your paperwork.
Even if your freeholder – the person who owns the land your flat is on – is paying for buildings insurance, you might still have to take out your own cover too.
Nathan, from GoCompare, explained: “Although the leasehold flat that you are buying might be covered by the freeholder’s buildings insurance, your mortgage lender will still require that you take out buildings insurance before you exchange.
“After you have bought the property, and if your leasehold flat has shared buildings insurance, or you pay part of that insurance through your service charge, then it’s up to you whether you renew that buildings insurance, as it’s not a legal requirement, but a mortgage requirement.”
Contents cover
Contents insurance can be useful to cover what is inside your property, and in some cases, whatever you’re carrying around.
The Government says the average UK household owns around £52,000 worth of goods, and Confused.com says the average contents policy based on this figure is £68.29 a year.
The exact cover you get with contents insurance varies depending on the insurer and each individual policy, but most will help pay for repairs or replacements caused by theft, fire, floods or loss.
You can also pay extra to include cover for lost or stolen items outside of your home, high-value items and accidental damage.
But while you will likely need to take out buildings insurance to get approved for a mortgage, most lenders don’t require you to take out a contents policy.
If you’re in a leasehold property, the freeholder won’t be responsible for your contents, so it can be worth taking out a policy.
Nathan said: “While contents insurance isn’t legally required, it is a good idea to have.
“Whether you own your property or are renting, it can offer you financial protection should the worst happen.”
How to get the best price for buildings and contents insurance
The ABI said between April and June, the average cost of a combined building and contents premium was £396, up from £329 last year.
It is the highest price home insurance has been since 2017, when a premium would have set you back £406 at one point.
So now has never been a more important time to look for ways to cut costs on home insurance, whether that be buildings or a contents policy.
Luckily, there are ways to cut costs.
When it comes to buildings insurance, insurance brokers should be able to help you find the best cover and price.
Bear in mind brokers do charge you a fee for their services though.
Another way to save money is by getting a surveyor in to figure out an accurate figure on how much it would cost to rebuild your home.
You can find one via //www.ricsfirms.com/commercial/legal-financial/property-insurance/.
The rebuild cost of a home is the amount it would cost to completely rebuild your home if it was destroyed beyond repair, and includes the price of labour and materials.
Get this figure wrong and if your home were to be hit with a flood or fire and destroyed, you may not be adequately covered meaning you would have to foot some of the bill with your insurer.
When it comes to contents insurance, the quickest way to get the best deal is by using price comparison sites like Compare the Market, MoneySuperMarket and Confused.com.
It’s also worth checking deals that aren’t on comparison sites too, like Coverbaloo and Urban Jungle.
And you can try using an insurance broker who will scope out the best deals for you too.
Once you’ve decided on a deal, see if you can get cashback on it by buying it through a cashback site like Quidco or Topcashback.
How to cut home insurance costs
If you’re looking to save money on home insurance generally, there are ways to cut costs on both types of policy.
Ceri McMillan, insurance expert at Go Compare previously told The Sun renewing your policy 27 days ahead of it expiring could save you £60.
And at the very least, don’t wait for your policy to auto-renew as you’ll likely pay more than if you shop around for a cheaper deal.
If you’ve got the money up front, it’s worth paying for your premium in one lump sum as well.
Ceri previously told The Sun you can save around 10% on your premium using the trick.
Combining contents and buildings policies rather than paying for them separately could save you £100 a year as well, according to Confused.com.
Installing a burglar alarm can help drive down your premium price as well, albeit after the initial up front cost.
Consumer group Which? , and install it yourself to save extra cash.
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