What is home insurance and why is it important?
Guarantor Loans Comparison looks into what exactly home insurance is and how it works, what it covers and how to make sure you get the right level of protection.
According to statistics, more than one fifth of British homeowners do not have home insurance in place. A whopping five million households do not have home insurance, then. If this is the case, then surely it cannot be that important. Wrong! We are going to explain why having home insurance is of value and why you should consider taking it out if you have not already.
What is home insurance?
Home insurance is an insurance policy which aims to protect your physical property as well as your belongings.
There are three main types of home insurance which you can look into. These include:
- Building insurance
- Contents Insurance
- Combined buildings and contents insurance
Buildings insurance covers the cost of repairing any damage which may happen to the physical structure of your property. This will include the roof, walls, windows and permanent fixtures such as a bath or a fitted kitchen. As a rule of thumb, having buildings insurance will cover you if your property needs to be rebuilt, even from the ground up. The insurance company should calculate the amount of coverage that you will need. Some policies will not cover more extreme things like earthquakes or flooding, so if this is something which may affect you, look into finding a policy which will cover either or both of these things,
Meanwhile, contents insurance simply covers the cost of replacing any belongings that can be found in your home, if they damaged, destroyed or stolen. For a better understanding, ‘contents’ will be treated as items which you would take with you if you moved home. You will need this form of home insurance if you cannot go without the necessities and luxuries which you live with inside your home day-to-day.
Of course, the combination of the two covers you for the physical structure as well as your belongings. This will be the most expensive form of insurance, but perhaps the wisest policy to take out.
Home Insurance Provides Liability Coverage
No one intends for anyone on their property to get hurt, but life is so that accidents do happen. Your family member could slip on a piece of ice and break a bone as a result or your pet could bite the delivery man or woman.
To be on the side of caution, you should protect yourself with liability coverage which is offered by homeowner insurance policies. The liability part of the policy will cover you for the costs associated with any injuries which take place on your property. Without this, you could be paying some hefty bills for things that were simply out of your control and not your fault at all.
Home insurance fulfils the mortgage contract
It is very likely that homeowners would not carry a mortgage on their homes. If you are a homeowner with a mortgage, you may not be aware, but your contract is likely to require you to take out home insurance. This is because the lender has a financial stake in your home, so they would not want to lose out as a result of you not having home insurance.
Be aware that a policy you find organically is probably going to be a better deal than one that your mortgage providers find for you. Therefore, it is wise to take the time to shop around and do your own research into the best policies and the best providers for your property and your own needs.