Home > Insurance > Home and Contents Insurance

Home and Contents Insurance

By: J.A.J Aaronson - Updated: 16 Oct 2010 | comments*Discuss
 
Insurance Home Insurance Homeowners

The purpose of insurance is two-fold; firstly it offers the policy holder peace of mind, and secondly it offers the guarantee of compensation in the event of disaster. There are few places in which this peace of mind and guarantee would be more welcome than the home.

Home and contents insurance is very much a necessity. If you are a homeowner, it is likely that your home is your biggest asset. As a result, it is essential that it is financially protected against the possibility of damage. Although premiums are on the rise, there is no doubt that, if some disaster were to occur, you would ultimately make a saving through paying for home insurance as opposed to paying for repairs yourself. The same theory applies to contents insurance; the idea is that the premiums should be less than you would spend replacing your possessions in the event of theft. As a policy holder you are, therefore, essentially gambling on damage or theft occurring.

Mortgage Prerequisites

As has been mentioned, home and contents insurance premiums have risen. Some organisations are offering apparently very competitive rates; however, you should be aware that these tend to be cheap because they are full of exclusions. In order to qualify for a mortgage, you will be required to have ‘adequate’ home insurance. The definition of ‘adequate’ will vary depending on the individual lender, but will typically require you to be insured against flood, fire, storm, subsistence, vandalism and serious accidental damage.

While being insured is in itself a necessity, it is also vital that you are not under-insured. A worryingly high proportion of homeowners are paying for insurance that is not sufficient for their needs. It is important to remember that sum for which you are insured should reflect not the market value of your property, but rather the total cost of rebuilding were it to be completely destroyed. In order to get an accurate idea of how much you should be insured for, you can get an assessment performed by a chartered surveyor. It is possible, however, to work this out yourself if you have some time and some aptitude for maths. There is a guide available for this purpose on the website of the Association of British Insurers.

Contents Insurance

In contrast, contents insurance is not a prerequisite for a successful mortgage application. That is not to say, however, that it is any less important. Indeed, the risk of theft is potentially far greater than the risk of damage to the actual building, and so you should be certain that you are adequately covered for your possessions as well. In the case of contents insurance, working out the sum to be insured is not as difficult. This sum should reflect the value of everything that you would take with you if you were to move house.

It should be noted that important caveats apply to every insurance policy, and it is vital that you are familiar with the specifics of your own. What may seem like unimportant small print could well make the difference between a valid claim and no claim at all. As such, it is important that you read the policy documents carefully before making a decision.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Stanharris
    Re: Renegotiating Your Loans
    Thanks for sharing a valuable information. It is really informative and helpful. the information that you have shared is really useful.…
    4 April 2019
  • Oggy
    Re: Taxation for the Self-Employed
    I’m a construction worker on cis can I claim back my 20% tax back on my first 12k tax is deducted before I’m paid although I’m…
    1 April 2019
  • Caz
    Re: How Much Tax do I Have to Pay?
    Iv just started working for an agency I will be played weekly they not taken out tax and national insurance I have to have my…
    23 March 2019
  • SylviaBlood
    Re: A Guide to Unemployment Benefits
    an you help me pls I had operation on my kidney followed by chest infection I then went profound deaf had cochlear implant…
    19 February 2019
  • sylv
    Re: A Guide to Unemployment Benefits
    i returnee red to work after 2operations I was on ESA support group con based. I went to work I had my hours cut but unable…
    19 February 2019
  • Jax
    Re: How Much Tax do I Have to Pay?
    I earned £924 for working 99 hours last month yet between tax and national insurance Im just bringing home £690 is this right?
    24 January 2019
  • Stuart55
    Re: What is a Stakeholder Pension?
    I was put into a pension scheme by my works, in 2002,I left after 1 year and i only paid £900, into the fund, since then I have…
    12 January 2019
  • Bpro
    Re: A Guide to Unemployment Benefits
    I have been a self-employed taxi driver for the last 8 years, but but unfortunately two weeks ago I received a driving ban…
    20 December 2018
  • Ken
    Re: What is SERPS and What Was 'Contracting Out' ?
    What makes the writer of this article think that the State Second pension is aiming to provide a better…
    9 December 2018
  • Adamski
    Re: Negotiating a Redundancy Package
    Hi, I have turned 50 now and are being made redundant, i havent claimed for over 32 years. What will i be entitled to now?
    5 December 2018