Levels of Cover

Levels of Cover

• Buildings Insurance

• Contents Insurance

• Combined Buildings & Contents

Buildings Insurance

Buildings insurance provides cover for the cost of maintaining permanent structures in the home as well as the land you own. A buildings insurance policy will cover funds to rebuild your home in the event of it being damaged by exterior forces beyond the control of the policyholder including:

• Storm and flood damage

• Water leakage and burst pipes

• Fire, smoke and explosions

• Subsidence/land slips

• Vandalism or third party damage

Buildings insurance does not explicitly provide cover for just the bare bones of your house, i.e. the brickwork and tiling. Policies typically also include not only the outside structure of your house, but often includes permanent fittings such as sinks, toilets, baths and fitted kitchens or exterior features such as walls and garden fences – cover sometimes also extends to sheds and garages, although this is not always the case. A fitted feature or permanent fitting is usually defined as something such as a kitchen sink or built-in wardrobes that cannot be removed from the property without altering the physical structure of the house in some way. Burst water pipes cause damage to floorboards, carpets, masonry and wiring, and as such, permanent features such as baths, sinks and showers are covered under buildings insurance.

The available cover advertised will usually come with a ceiling limit of say, £1,000,000 but be aware that many insurers will only provide a cash amount up to the market value of your property, so you shouldn't always assume that you'll have a million to rebuild your house with.

It is common these days for mortgage providers to insist on you taking out buildings insurance as a way of securing the mortgage – your house is considered to be an investment on their part as well as yours until you've repaid the mortgage in full, and so they have an interest in keeping the property protected. Some mortgage providers may offer buildings insurance along with your mortgage itself, which could see you qualifying for special discounts, or reduced repayments, although remember that you are not obliged to buy from anyone, so shop around for a cover plan that it the most suitable – don't just jump at the first offer of a cheaper mortgage.

Some policies will provide you with money towards alternative accommodation if your home is uninhabitable whilst repairs are being made – there will be a set limit to how much you will be entitled, usually to up to a certain percentage of the insured value of the property. 10% is the typical rate, but some providers will offer more, or even specify a ceiling limit, regardless of the value of your house.

Pest control is also another feature of home insurance policies that buyers should keep an eye out for. People underestimate the extent of damage that rats can cause to a house – they can chew through practically everything you're likely to find in the home, and aren't too concerned about the after effects of gnawing on a live power cable. Fires and damage caused by rodents is usually not covered by insurers, but a number of providers are beginning to supply this, as it is becoming a popular addition to buildings insurance plans.

Most policies pay for accidental damage to buildings, with some insurers providing cover for damage caused by DIY accidents – this usually comes as an additional option to a policy for an extra monthly fee.

Contents Insurance

Although having contents insurance is not a prerequisite for mortgage lenders, it is as equally important to consider insuring your worldly possessions as it is your home – everything inside your house not considered to be a permanent fixture, for example, white and black goods, phones, computers, clothes, and furniture. Recently, cover for multiple items such as CD and DVD collections (up to a certain number) has become available, as is cover for audio files purchased from a site like iTunes, Nokia Music Store, or Napster that are lost as a result of your computer being stolen or damaged.

Most home contents insurance policies will even cover the contents of your fridge and freezer. Policies are advisable for homeowners and tenants while landlord contents insurance can be limited if the property is let unfurnished or part furnished. Cover for gardening equipment and expensive plants are also increasing in popularity – you can name your garden as another 'room' under a contents insurance policy.

Your contents insurance policy can also include cover for some items you take away from the home such as bicycles, prams, mobile phones, jewellery and handbag contents – this is known as All Risks Cover, and is a popular addition to contents insurance plans.

Similarly to building insurance, contents insurance offers protection against everything typically covered under buildings insurance:

• Storm and flood damage

• Water leakage and burst pipes

• Fire, smoke and explosions

• Subsidence/land slips

• Vandalism or third party damage

Obviously, the more items you name under the policy, the more expensive the premium will be. Watch out for policies which include cover for product such as mobile phones which often come with their own guarantees if they are on contract – check everything you own, you may already be insured for some items. There's no point driving up the cost of a premium if you don't need to.

Some insurers may impose a ceiling limit on high risk items, such as those more than £1,000 in value, will generally have to be considered separately from your contents policy.

As with buildings cover there is a ceiling limit; a total sum for which your contents are covered which is the most your insurer will pay even if your possessions are lost or destroyed. The total sum is determined by the amount of things you want to insure and it determines the size of the premiums you pay, so it's important that you name everything you want insured that you aren't already covered for before submitting.

 Combined Buildings & Contents

Insurers who provide both buildings and contents insurance may offer to sell you both insurance plans under a combined policy. This could be advantageous in terms of saving money and the hassle of having to apply twice. However, just because an insurer provides a great deal on contents insurance, offering to cover exactly what you want, it does not mean that their buildings insurance will be as good.

The opposite also applies; there is no point having rock solid buildings insurance combined with a contents plan that only provides cover for a handful of items and not your treasured CD collection/Pradaclothes/Faberge eggs. Consider what you want covered under a policy before committing yourself.

Related Frequent Questions:

• Additional Home Insurance Options
• How to reduce your premium