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Buildings Insurance covers loss or damage to the structure of your home, the building itself. Contents Insurance (see below) covers your possessions.
How much cover do I need?
The amount of insurance you arrange should be enough to cover the total cost of rebuilding your premises. The rebuilding cost of a building is not the same as its market value. Depending upon the type of property the rebuilding cost could be more or less than the property valuation. Your Insurance Company will provide a conversion table to estimate the rebuilding costs and give you an idea of the level of insurance you require. You could also pay a surveyor to carry out a rebuilding estimate survey for you. If your property is very valuable or is a listed building it is almost certainly worth obtaining a professional valuation first.
Insurance companies usually index-link the level of cover year on year so that the amount of cover offered by the policy keeps up with inflation. The level of insurance cover will change each year, so it is wise to fully review your policy every 2 or 3 years to ensure that the cover remains adequate for your needs.
What does the Insurance policy protect?
If your house is destroyed or rendered uninhabitable, you can claim the cost to rebuild or carry out the necessary repairs. Your insurance cover should provide you with alternative accommodation whilst the rebuilding work is carried out. You can make smaller claims on your policy for damage caused by less destructive events such as floods, fire or smoke damage, or even broken windows.
Other areas that may be covered are:
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Subsidence of the foundations of your home |
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Damage by falling objects trees, aerials, parts of aircraft |
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Collision damage if someone drives into your home |
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Burst pipes, tanks, damaged boilers
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Damage caused during a civil riot. |
In some areas, the policy may exclude certain events. These exclusions can vary from policy to policy and between different insurance companies. Always check your policy details, so that you know those risks you are not insured against.
Buildings Insurance may include outbuildings such as sheds or garages. The policy may also cover any legal costs arising from damage to your home. However, it is unlikely that Buildings Insurance would cover the cost of repairing problems caused by normal wear and tear. While you cannot normally make a claim to have the roof repaired simply because it is old and has started to leak, you might be able to claim if a tree or other object fell on it and caused the roof to leak.
Buildings Insurance and Mortgages
Most mortgage lenders require you to take out a Buildings Insurance policy to protect the building from damage. Many lenders offer their own insurance policy at the time you take out the mortgage, but you are under no obligation to buy your insurance from them. There is no guarantee that they offer the cheapest rates so you should always consider finding a cheaper alternative. You should always make sure that there is proper insurance in place from the point that you first become responsible for the premises - even before moving in.
Contents Insurance gives protection on your personal possessions whether they are at home, in the car or during a move. Contents Insurance is often combined with Building insurance.
Contents insurance covers both the total loss of your possessions or their damage caused by:
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theft |
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fire, flood or smoke damage |
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water from burst boilers, tanks or pipes |
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accidental damage |
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subsidence |
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falling branches, trees or aerials |
Most items can be covered by a general policy but expensive items such as jewellery, works of art and antiques may need to be insured separately. This is because most contents policies have a limit to the amount they will pay for a single item. If you have items that fall into this category, you can name them on the policy and pay a higher premium to include them or alternatively, consider a specialist insurer for these items.
What different types are there?
There are two main types of policy:
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you calculate the replacement value of everything in your home and insure for that amount |
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you buy a "bedroom rated" policy in which the insurer provides an amount of cover based on the number of bedrooms in your home |
Other differences relate to the replacement value of each item. The commonest type of policy will give you a cash payment equalling the price of buying an identical new copy of the item. In the second type, the insurance company itself will buy and replace the item. In the third type, the insurance company will give you cash equalling what they judge to be the second-hand value of the item. These policies are known as "indemnity policies" and are useful for reducing your premium costs if you live in a high risk area.
Differences will also be particular to each policy, for example:
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The amount of the excess the insurance company expects you to pay |
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Cover for garden items or items stored in garden sheds |
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Cover for bicycles, boats and caravans |
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Cover for freezer contents |
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Discount for not claiming for a given length of time |
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Payment for replacing doors, or door and window locks following a burglary |
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What exactly is meant by accidental damage and what it covers – all items or just windows and mirrors |
What should I think about when choosing a policy?
Decide if you want to calculate the value of your possessions yourself or if you will accept a "one price fits all" solution from your insurer. Check the details of policies and see which best suits your circumstances. For example if someone is at home most of the time, you can find policies offering a discount. Certain types of burglar alarms can also reduce premiums. Consider paying your premium annually to benefit from any discount.
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