Did you know that house insurance could mean contents insurance, buildings insurance or both? When you are choosing insurance for your home, it is a good idea to look closely at the product you are getting and choose the cover which best suits your needs.
Home insurance covers the physical structure of your house – also known as buildings insurance, but contents insurance covers the items inside it. The difference is important because your valuables are not covered by your home insurance, but by your contents insurance. And your building’s structure is not covered by your contents insurance.
This provides you with the flexibility to take out the cover you actually need, and avoid paying for cover you don’t. Following is a brief outline of the two main types of house insurance generally available, which will help you to make an informed decision when purchasing home insurance.
Unless you own the building you live in, you probably don’t need buildings insurance. If you are expected to carry the costs if something were to happen to the bricks and mortar of the place you are living in or rent out, then building insurance is a good idea. Usually this only applies if you own the property, and not if you rent the property you live in. When insuring a property you own, make sure it is covered for the rebuild costs and not the market value. It is often cheaper to rebuild your house from scratch than to buy another one, as the land your house sits on will usually be fine to rebuild on if your home is damaged in a fire or flood situation.
Be careful not to choose the first cheap building insurance quote available – think about your needs first: for example, some policies provide alternative accommodation if your home is uninhabitable, which might be very useful to you as a home owner.
Contents insurance is there to provide protection for appliances, electronic goods, furniture, clothing – in other words, the items inside your home that do not form part of the structure of the buildings. These day-to-day items could leave you seriously out of pocket if they were damaged, lost or stolen. Contents insurance applies to homeowners, landlords and tenants.
Some home contents insurance policies include cover for items taken outside the home, like bicycles or the contents of your handbag. Clothing, watches and mobile phones can also be covered along with sports equipment.
Accidental damage cover is often not part of a house insurance policy. This generally covers homeowners and renters against DIY accidents such as paint spillages and is available in addition to both building and contents insurance.
When tailoring your policy to suit your needs, never assume that you are covered – always check the fine print in your policy. Check your policy documents carefully when you receive them and make sure you are aware of the limits of your coverage.
Source : Prudential News Letter
