Bulidings and Contents Insurance
Earn Holiday Miles buying home insurance.
Home insurance breaks down into two types - buildings insurance and contents insurance.
Here's how it works. Imagine you can pick your home up in your hand. Now, turn it
upside down and give it a shake. Things that stay put - the ceilings, floors, doors,
sinks, bath etc - are covered by buildings insurance. Items that fall - furniture,
TV, fridge freezer, CDs etc. - come under contents insurance.
Buildings Insurance
Buildings insurance covers the structure, fixtures and fittings - floors, ceilings,
walls, roof, windows, doors, bathroom suites, fitted kitchens and built-in cupboards.
Buildings cover is compulsory if your home is mortgaged, as a lender will want to
know the investment is safeguarded. If you own the property outright, it’s up to
you if you buy building insurance. But remember it’s you who foots the entire bill
if something goes wrong and you’re uninsured.
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What’s Covered?
A comprehensive policy should cover the rebuild/repair cost for events like storm/tree
damage; fire; lightning strike; gas explosion; vandalism; damage caused by a vehicle;
plumbing disasters and earthquake. If you own a property and have extended it in
any way, don’t forget to upgrade your buildings insurance. The amount of buildings
insurance you need should equal the cost of rebuilding your home. An insurance company
will only pay out on the part of your house that is actually covered.
Contents Insurance
This insures household belongings against loss, damage and theft, and is the only
home insurance you need if you rent your home. Contents insurance is optional as
it’s only you who loses if everything goes up in smoke or a burglar steals your
possessions. But if you value your belongings, contents insurance gives peace of
mind.
There are two main types of contents insurance:
- Indemnity insurance covers your contents, But any amount paid to you for a claim
takes into account wear and tear. For example, if your five-year-old sofa is ruined,
the payout will take into account the the sofa’s age. The amount will be a lot less
than the cost of ‘replacement-as-new’.
- New for old cover pays out the full amount of a replacement. But this type of cover
usually costs a bit more than the ‘indemnity’ option. Some insurers offer accidental
damage cover - which can cover accidental breakages of TVs, DVDs, mirrors, PCs,
vases etc - as standard whereas others charge extra.
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Don’t Under-Insure
Don’t make the mistake of under-insuring. If you under insure, any future claims
might not be met in full. One way to gauge how much you’ll need is to walk into
every room in your home and make a list of items and their worth. Alternatively,
the Association of British Insurers (ABI) has a home contents value calculator to
help you total the value of your possessions.