Making sense of home insurance
Buying a home for the first time can be very confusing. You’ll need to research into saving for a house, how much deposit to pay, first time buyer mortgages, moving house checklists, stamp duty and much more.
We’ve prepared a quick, easy to read guide for the home insurance part of your exciting journey. We hope this helps make things a little easier.
Different types of cover
Before you buy a home insurance policy for your first home, you’ll need to know what type of cover you need. Let’s start with the basics:
Buildings, Contents, Combined Buildings and Contents
Most first time buyers have to take out a mortgage to buy the property. Mortgage lenders require you to buy buildings insurance, to protect their investment.
- Buildings insurance covers the structure of the property, the walls, roof, windows, doors, service pipes, gates, flooring and any fixed fixtures such as kitchen cupboards and the bathroom suite.
- Contents insurance covers your belongings, things you would take with you when you move home. Some people suggest that if you tipped the house upside down, whatever falls out is classed as contents.
You can buy buildings and contents insurance separately, but in practice most people buy a combined buildings and contents policy as it’s less expensive to buy combined; and if you need to make a claim you’d only have one insurer to deal with, which makes things simpler.
As it sounds, this cover will protect you if you accidentally damage the building or your contents. The most common accidental damage claims involve dogs and children, so if your household includes either of these, you may want to consider opting for a policy that includes accidental damage.
More about accidental damage cover
Outside the home
If you regularly take your laptop, bicycle or any other valuables out of the home on days out and mini breaks then you may want to take out “outside the home” cover as part of your contents insurance.
New for old
New for old is a term used in contents insurance policies which means that in most cases any items damaged, lost or stolen will be replaced by offering you the value of new versions of those items at today’s prices.
To cover individual expensive items that insurers classify as 'high risk', you will need to list any valuable jewellery, watches, artwork etc. You may be asked to get a valuation of these items before you buy the policy and it’s a good idea to take photographs of your valuables which could help the police recover your goods if they were taken in a burglary.
More about insuring your high risk items
A bicycle is stolen in the UK every 90 seconds! If it happens to you, you want to know that you’ll be able to make a claim and buy a new bicycle quickly. Insuring your bicycle is straight forward: just tell your insurer the make, model and value to buy new. You should always make sure you lock your bike to a solid, immovable object with a good quality lock.The Police also recommend registering your bike with bikeregister.com and immobilise.com, so that if it is stolen there’s a higher chance of it being recovered quickly and preventing it being sold.
More about bicycle insurance
Outbuildings, garages and sheds
If you are going to buy a property with an outbuilding of any kind, you’ll need to check that the policy covers rebuilding the outbuilding if it was destroyed. Also be sure to calculate the value of your belongings kept in the outbuildings. Don’t forget lawnmowers, BBQs, power tools, gym equipment etc.
If someone is injured or worse, dies at your property; or if their belongings are damaged in your home because of something that happens to the property then the public liability insurance will help you cover the cost of being sued.
This cover provides you and your family with access to telephone legal advice, along with insurance cover for legal costs and expenses should you experience legal problems such as contract disputes over buying the home you live in.
More about legal expenses insurance
As first time buyers, something going wrong at home will be daunting to start with. You’ll want something in place to help you cope with emergencies. For example, if the only toilet in your new home stops working, or the main heating system develops a fault you’ll be able to use home emergency insurance to pay for emergency repairs whilst you arrange for a full fix to be put in place.
More about home emergency cover
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When to buy your insurance policy
Ideally, once you’ve had your offer on the property accepted and you’ve booked in the home buyer's survey you should start looking around at the different insurance options available. This will mean that you have enough time to make a considered decision and be able to buy the policy before exchange.
Most mortgage providers request a copy of the home buildings insurance policy before exchange of contracts, so it’s important to sort out the cover before the big day.
It’s also important to buy your contents insurance policy before you move in to your new home, so that if your belongings are damaged in transit you will be able to make a claim.
It’s not compulsory to buy the home insurance policy offered by your bank or building society alongside your first time buyer's mortgage. Shopping around will let you get the most appropriate policy for your needs and in most cases, save you money.
What cover levels do you need?
Sometimes called “limits” or cover levels, this refers to the total amount that would be paid to you in a claim. There are typically separate limits for buildings, contents, your specified valuables and your belongings away from the home. Check an insurer’s policy booklet to find out about the different cover levels for each section of the insurance.
You can also check whether the insurer has a good Defaqto rating, as this is independently awarded based on how generous the cover levels are, per insurance policy. Defaqto 5 Star Ratings indicate that a policy has high cover levels and is one of the most comprehensive in the marketplace.
More about Defaqto ratings
Building rebuild value
Called the “sum insured” by the insurance industry, this is what it would cost to rebuild your property if it was completely destroyed. You need to calculate how much this will be for your first home, as all properties are different. You will need to let the insurer know how much sum insured you need. Thankfully, there are tools online to help you calculate this, such as the Buildings Cost Information Service’s free calculator. You will need to include “hidden costs” such as the cost to clear the land before rebuilding, architects' fees and planning permission fees if applicable.
Bear in mind that the building rebuild value is NOT the market value of the property.
Calculating the value of contents
As well as working out how much to insure the building for, you will also need to work out how much it would cost to replace all your belongings if you need to make a claim.
The easiest way to do this is to go from room to room in your current home, listing each item. In the case of electronics, note down the make and model. Then add a price to replace each item with a new model at today’s prices.
Add up all the totals to get your contents sum insured value: this is what you'll need to tell your insurer.
An excess is the amount that you will pay towards the cost of a claim, if you need to make a claim. Insurance policies usually include a compulsory excess. You can lower the cost of the insurance by choosing to add a oluntary excess. For example, if the compulsory excess was £100 and you decided to add a voluntary excess of £200, if you made a claim and it was successful you would receive the value of the claim from the insurance provider less £300.
If you make a claim, the insurer will check the sum insured value you declared on the policy when you bought it. If it’s deemed that you don’t have enough sum insured to cover the rebuilding of your home, or the value of your belongings, then you are “under insured”. If you have 25% less sum insured than you should have, the insurer may reduce the value paid out in a claim by 25%. This is why it’s worth taking the time to properly calculate how much cover you need before you buy the policy.
How much does home insurance cost?
The cost of a home insurance policy varies greatly depending on the size of the property, the materials it’s constructed with, whether the area is liable to flooding, the amount of burglaries in the local area and many more factors. It’s easy to get your own home insurance quote online - just calculate the contents sum insured and buildings sum insured that you need and then get a quote get to find out the price for your home.
You might also like to read about how to reduce your premium.
The reason you buy home insurance is so that it can help you if anything unexpected goes wrong. Claiming is made as simple as possible to keep your stress levels low. You will need to phone the insurance provider’s claims line and explain clearly what happened and what exactly has been damaged or lost so that the details can be logged. In some cases, the insurer may arrange for a loss adjuster to visit your home to look at the extent of the damage or to examine the surrounding area especially in the case of ground movement or a flood. In the case of a simple claim, the money might be transferred into your bank account within a couple of days.
Renewing your policy
Home insurance policies are usually 12 months long. In the few weeks before your renewal date the insurance company will send you a renewal invitation, offering a price for the next 12 months to insure the property as it was described last year. If you have made any changes to the property such as building an extension or you have purchased new gadgets or jewellery; then this is the time to make sure you tell your insurer so that you are appropriately insured for the next 12 months.
Find out more about HomeProtect’s policy
Will definitely recommend to others after my first experience, also very competitive. Wednesday, 14 June 2017
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Keep the claims phone number in your mobile phone, along with your policy number.
First time getting home insurance – [agent] was very helpful and made the extra effort to ensure I got the policy sorted in time – very grateful. – Mr Mumtaz Trustpilot, 17 July 2017
I never renew with the same company but the price was even cheaper than last year I couldn't just walk away. With an easy renewal and hassle free transaction it was great to renew with Home Protect again. Trustpilot, 13 March 2017
We've insured our home with HomeProtect for 5 years now and have been consistently impressed by the service. This year we needed to change some details which was a very straightforward process and we revived our updated paperwork promptly. I'd highly recommend this company! Trustpilot, 16 February 2017