There are around 22.6 million homes in the UK and more than 19 million people have taken out a home insurance policy. Only 55% of London homes have content cover, with average home insurance cost standing at around £309 per year.
Home insurance can protect you against repairing or rebuilding your home if it is damaged due to an expected incident such as a flood, fire or subsidence. We take a closer look at home insurance to see what it is, what it covers and how much it could cost.
What is home insurance?
Home insurance is a policy designed to give you financial protection in the event you experience unavoidable damage to your home. If the right criteria are met, you may receive a pay out from the insurance company which can be used to replace your possessions.
The two main types of home insurance are:
Contents insurance
This is an insurance policy covering items in your home that can be taken with you if you move. This includes things such as white goods and furniture, curtains, carpets and garden equipment.
You should be able to get add-ons to your insurance policy to cover items that are taken outside of your home, such as mobile phones, laptops and jewellery. Contents insurance cannot be used to cover accidental damage or wear and tear.
Buildings insurance
Buildings insurance covers the structure of the property and any permanent fixtures it has, such as baths, kitchens and built-in cabinets. It also provides financial protection for outside buildings such garages, garden sheds and greenhouses.
In most cases a standard buildings insurance policy cannot be used to cover wear and tear damage, boundary walls, fences, gates and paths and any legal expenses incurred for property-related disputes. Home emergency cover is usually also available as an add-on or separate policy.
Why do I need home insurance?
While it is not a legal requirement to have home insurance, it is worth giving serious consideration to as it can give you peace of mind that your home and possessions have financial protection if you experience a burglary, flood or some other unexpected event.
Anyone thinking of buying a house will likely be asked by a mortgage provider to show proof of buildings insurance before they offer a loan.
How much does home insurance cost?
There is no fixed cost when it comes to home insurance. This is because there are several factors that are used to determine the cost of the policy, such as age, location, property type and how you pay.
In general terms, home insurance often becomes cheaper as you get older. While it depends on your personal circumstances, insurers tend to believe that older homeowners pose less of a risk.
Insurers will factor in where you live as part of their cost calculation. Some parts of the country are more expensive than others; for example, Greater London tends to be the most expensive, while the Northeast is often the cheapest.
The type of property you live in, and the number of bedrooms it has, also has a role to play. Houses are more expensive to cover than flats or bungalows, while listed buildings come at a premium.
If you pay for your home insurance through monthly instalments this will be more expensive than settling it in one lump sum as interest is added along the way.
Contents and buildings insurance can be combined into a single policy, or you can take out separate policies for just the building or your contents. A combined policy will be more expensive because it offers more cover.
If any add-ons are included in the policy, such as accidental damage cover, legal protection, possessions used outside of the home or bicycle cover, this will also increase the price.
What happens if I don’t have home insurance?
Home insurance is not a legal requirement, so you are not breaking any laws but not taking out a policy. However, if you don’t have cover in place, it could leave you vulnerable to unexpected events that are costly to pay for.
The Association of British Insurers state that insurers pay out over £8 million a day to cover homeowners for loss and damages.
For anyone thinking of buying a property, you may find that securing a loan is more difficult without home insurance, as most insurers require you to take out a policy.