Buildings and contents insurance can sometimes be overlooked areas of home finance. Home insurance for the fabric of the building itself will normally be a requirement for anyone with a mortgage. But once the mortgage has been advanced and the lender’s requirement satisfied, many homeowners simply renew the same policy every year with barely a second thought. Similarly, most people recognise the value of insuring the contents of their home, but renew the existing cover each year almost by way of inertia. There could be a lot more to choosing the right buildings and contents home insurance, however, that may provide you with far more appropriate cover at a considerably better price.
The reason for this being regarded a necessity by most people is because of the sheer value of the property, the cost of repairing it – or even having to rebuild it – if things go wrong, and the wide range of risks to which any property is exposed. These risks might include fire, storms, lightning strikes, flooding, subsidence, vandalism, falling trees and branches and toppled satellite dishes and aerials. Claims under buildings insurance policies can range from the relatively minor to those of such major proportions that the whole property needs to be rebuilt. For this reason, it’s important to ensure that the home is insured to the full cost of rebuilding it. Depending on the age and location of the property, this is not necessarily the value of the existing building, but the actual cost of building a new one on the same plot of land. Included in the insurance valuation there should also be provision for loss or damage to related buildings and structures such as the garage (s), patios, fences, swimming pools, paths and the like.
It’s important to bear in mind, too, that circumstances change. A rebuild valuation one year is likely to be different in a few years time, so it could be worth reviewing the buildings insurance to ensure that it accurately reflects current valuations. Some policies will include an automatic increase in the valuation in line with the prevailing rate of inflation, which can help to keep the buildings insurance up to date.
The Centre for Economic and Business Research conducted a study a while ago suggesting that the average home contained £ 44,500 some-worth of possessions, although the average sum insured was in fact only £ 35,000.
This flags up at least two interesting facts. The first is that the value of a home’s contents certainly makes them worth insuring against the common risks of theft, loss or damage. The second is that most people apparently under-estimate and therefore under-insure the contents of their homes. Such under-insurance can lead to huge disappointments in the event of a claim because of the way in which insurance adjusters “average” the cost of replacing even a single lost or damaged item against the total amount insured.
Choosing buildings and contents insurance
There is considerably more to buildings and contents insurance, therefore, than a one-off decision the first time you move into a new home. It’s important to review the level of cover – and what you’re paying for it – on a regular basis, in order to get the right deal at the best price.