If you are looking for home insurance, you may need to understand the types of insurance available in the market before making the right decision.

In this article we look at the types of home insurance available in the UK market to help you understand which type might be most suited for you.

What is home insurance

Home insurance simply put, is financial protection for your property and possessions as a precaution in the event they are damaged or stolen.

In the UK, there are two categories mainly of home insurance. They are building insurance and contents insurance.

Building insurance

The building insurance policy covers the structure of your property in the event it is damaged or needs to be rebuilt. These include walls, ceilings, roof, floors, permanent fixtures and may also include peripheral structures such as garages, sheds and fences.

Building insurance policies cover damages caused by floods, fire, earthquakes, vehicle collisions, vandalism and theft. Building insurance is a compulsory requirement if you intend on purchasing your property through a mortgage.

Contents insurance

This type of home insurance covers all movable items found within your property. These include furniture, jewellery, art work, electrical goods, kitchen appliances and clothing.  Content insurance typically covers damage occurring due to fire, floods, or theft.

The payout for the loss of your contents will be to replace items lost with a new one or the market value of the item covered.

How is home insurance estimated?

Building insurance – to get an estimation of value for your building insurance, you will require the services of a surveyor to calculate the rebuilding cost of your property in the event of it getting damaged or destroyed.

In addition to the overall calculation of your possessions and property, the insurer will also look at criteria such as the location you live and the security measures you may have installed.

Content insurance – The value of your possessions will be calculated as either the value per item or as the total value of all the items lost. A single item is usually insured for the sum of £1,000. The estimated value of your possessions must be provided by you to the insurer, after which your insurer will calculate the amount of cover you need.

You can also insure your house with a combination policy of both building and contents insurance together.

What are the limitations of home insurance?

As in any insurance cover there are limitations to this type of home insurance as well. And these are some of those limitations.

• Content insurance does not provide coverage for general wear and tear, accidental damages or if an item comes to the natural end of its useability. However, an additional accident cover can be obtained to insure breakages that may occur accidentally.

• Not all personal possessions may be covered by the standard contents policy. For certain items such as laptops, mobile phones and sometimes jewellery you may need to obtain an additional ‘personal possessions cover’.

• The clauses covered by your insurance will also have specifications attached to each of them. For example you may not claim for damages that take place over a period of time, badly built structures, and environmental disaster that do not meet the relevant criteria defined by the insurer.

• You will need to pay extra on your monthly premium for any item that exceeds the policy limit such as jewellery or art work.

• Some policies may not cover your possessions if they are stolen or damaged outside the home.

• Coverage is not valid for thefts that happen without a sign of forced entry.

You may want to check with your insurer and clarify these pointers before deciding on a policy.

Types of Home Insurance

It’s a known fact that properties in the UK are owned by many people, but the circumstances of each individual owner will differ. For this reason, insurers provide home insurance policies tailored to support your  circumstances. These are:

• Landlord Insurance.
• Tenant or Renter’s Insurance.
• Holiday homeowner Insurance.
• High value home Insurance.
• Student’s Home Insurance.

Landlord Insurance

Landlord insurance is specifically designed to suit owners of rented property. These types of policies are designed to provide coverage in addition to the standard cover of building insurance. The additional cover may include the following.

• Injuries occurring to tenants within the premises due to a building defect.
• Damage to a neighbour’s property due to a defect in your building.
• Repairs for malicious damage within the building caused by a tenant.
• Loss of rental payments.
• Accidental damage to your property.

If your rental property also includes furniture, you may want to consider getting a combined insurance policy for both the building and its contents.

Tenants Insurance

As a tenant your main concern will be your personal possessions, which means your preferred type of insurance would ideally be a content insurance policy.

However, as a tenant you also have the option of an additional insurance cover which will secure you against any damages that might occur within the premises you live. This is called tenants liability insurance which can be obtained along with a contents insurance or as a separate insurance policy by itself. 

Holiday Homeowner Insurance

Unlike a standard residence, you may like the idea of providing better protection for your  holiday home. Ideally a holiday home may have some fringes and luxury amenities that could do with a solid protection policy. Holiday homes in the UK may remain unoccupied for long periods of time which increases its chance of theft, vandalism and structural damage.

To cover this risk, holiday homeowner insurance provides a longer period of cover to a home that is unoccupied, up to a period of 60 days or more (depending on the lender). It must be noted, in standard home cover policies, you cannot make any claims if your house is left unoccupied for more than 30 days at a time.

If you have renters you may wish to include an accidental cover to the contents insurance of your holiday home.

High Value Home Insurance

If your property or the contents of your home surpass the value of a standard building and content insurance, you can choose to go with a high value home insurance policy. The benefit of this type of insurance is the ability to insure your property and valuables for a higher amount than what standard insurance policies may offer. High value insurance policies usually cover homes that are worth above  £1 million and contents that exceed the value of £1,000 per item.

Student Home Insurance

A student’s insurance is designed to cover your possessions while you are at a rental accommodation during your university years. The contents insured in this type of policy could include: Laptops, books, mobiles phones, furniture, and clothes. You may also get additional covers for your room key, tuition fees, musical instruments and against thefts or damage of your possessions that occur outside the rented premises.

Keep in mind that this insurance is only applicable while you are engaged in full time education in university.

Conclusion

As we see in this article, home insurance offers comprehensive and systematic methods of protection for your premises and belongings. In addition to the usual types of insurance, the variations that can be added on provide even better protection depending on your requirements whether it is a building or for contents that belong to you or your tenants. If you are unsure about which policy suits you best, speak to a professional organisation such as BVS Financial Services where an expert insurance broker will be able to offer you advice from a range of insurance providers and policies, guiding you towards getting the optimum benefit of your insurance policy.

Remember, being safe is better than sorry.

* Approved by The Openwork Partnership on 1st November 2023

This article is for guidance purposes only and does not constitute advice.