Buying a home - getting insurance

Insurance you need when you buy a home

• Mortgage protection (or some other form of life insurance such as term insurance or whole-of-life insurance)
• Home insurance includes buildings insurance and contents insurance. You do not have to take both out from the same provider and is worthwhile to shop around. You are not legally obliged to take out home insurance. But if you have a mortgage, your lender can insist that you have buildings insurance.

You may be offered other types of insurance as well, but these are optional. You do not have to get insurance from your own lender.

Home insurance

In this section, you will find information on:

• Types of home insurance available
• How much cover you need
• What discounts apply?
• What you do if you can't get home insurance
• Making a claim

Types of home insurance

You can buy insurance directly from insurers over the phone, internet or by mail, and also from insurance brokers who can deal with insurance companies on your behalf.

Home insurance is usually sold as a single policy that includes:

• buildings insurance which covers you for damage to buildings
• contents insurance which covers you for loss of or damage to the contents of your home
• all-risks cover which covers you for loss or damage to valuables (even when outside your home)
• liability insurance which covers you for injury to other people in or around your home.

All home insurance provides the same basic cover but there can be a considerable difference in what they exclude and the extras included on your policy.

When you buy insurance, it is important to remember that the policy offering the lowest premium is not always the best. It is essential to read the fine print first to discover what's covered before you sign up.

Buildings insurance

Buildings insurance covers anything you cannot take away with you if you move home. It includes the:

• structure of your home such as the roof, walls, windows and doors.
• permanent fittings such as tiled or hardwood floors, bathroom fittings and fitted kitchens.

You should insure your home for the amount it would cost to rebuild it, or the reinstatement value. This is different to the market value of your home, which is what you would get if you sold it. You can get details of current rebuilding costs from the Society of Chartered Surveyors.

It is important to make sure that you do not insure your home for too much or too little. If your home is insured for too little, your policy might not pay out enough for the full cost of repairing or rebuilding it if is damaged or destroyed.

If it is insured for too much, your premium will be higher than necessary and you will not get any extra benefit if you have to claim as you are only covered for actual cost of rebuilding or replacing contents. If you are living in an apartment and pay management fees, check if building insurance is covered within the fees.

Contents insurance

This covers the moveable objects in your home such as furniture, electrical equipment, pictures, paintings, clothing and other belongings. It can be taken out as a separate policy from buildings insurance or combined with it.

You should insure your contents for the amount it would cost you to replace them if they were stolen or damaged. It's worth taking the time to calculate these costs so that you insure your contents for the correct amount.

To help you estimate the value of your contents, download our guide 'Home insurance made easy'. Make sure to include the contents of your garage or shed and the cost of replacing carpets and curtains.

There is usually a limit on the value you can claim for any individual item. So you may need to list certain valuable items, such as jewellery or antiques, separately on your contents policy.

You should also check that your policy covers you to replace items on a 'new-for-old' basis. This allows you to buy a new item, such as a television, to replace one that has been damaged or stolen.

All-risks cover

This is an optional extra under most home insurance policies and protects you against loss or theft of, or accidental damage to, personal valuables such as jewellery, both outside and inside the home.

You will pay a higher premium for all-risks insurance than for normal contents cover. If you have to claim, your insurer may choose to either:

• give you the cash value of the item
• pay to repair or replace it.

With an all-risks policy, you can detail what items you want covered and their value. Or you may simply choose an overall value for 'unspecified items' without having to list each one. Most policies have an upper limit on the value, which can be attached to each item.

Liability insurance

Most home insurance policies include liability cover up to certain limits. This means that your policy would pay costs, expenses or fees that you become legally liable to pay to someone if they prove that something, such as an injury to them, is your fault.

For example, you could be covered if an employee, such as a tradesman or childminder, has an accident, gets ill, is injured or dies while working in your home. The policy could also cover accidental damage to someone else's belongings whilst in your home.

Some policies also include damages that you are liable for but that happen outside your home. For example, you could be covered for damages if you accidentally injure someone with a golf ball.

Remember, damage to you or your property caused by someone working in your home is not usually covered by your home insurance. You can only claim for this damage if the person who has caused it has their own public liability insurance.

How much cover do you need?  

The amount you pay for your home insurance depends on 3 main factors.

• The amount you insure your home for and whether it also includes contents - the greater the insured value of your buildings and contents, the higher your premium will be.
• The location of your home - insurers may charge more for homes in areas where there is a high rate of burglary or areas prone to flooding. City home owners usually pay more than rural home owners because there are more burglary claims in urban areas.
• The type of cover and discounts you get - insurers offer various discounts, which can reduce your premium by a certain percentage.

What discounts can you get?

Depending on the provider, you may get a discount if:

• You have no previous claims or have had no claims in the past five years;
• There is somebody over 50 living in the house;
• The residents of the house are non-smokers;
• A resident is usually in the house during the day;
• The house has an alarm (you may get an extra discount if it is monitored);
• You have car and home insurance with the same company;
• You have a smoke detector installed;
• Your house is in a neighbourhood watch area;
• The person applying is over 40, or in some cases over 50; or
• The house is more than 10 years old.

Generally, discounts are more widely available online or through a broker.

Find out more about the cost of insuring your home from our latest home insurance cost comparison. You can also use our home insurance shopping around checklist to help you make note of costs, benefits and discounts when getting quotes.  

What you do if you can't get home insurance

It would be very unusual not be to able to get buildings insurance, unless the house was in an area that was liable to flooding. To insure your home, shop around by ringing insurance companies and brokers and visiting online broker sites for the best deal.

Making a claim

If something goes wrong and you are insured for these loses, you can make a claim.

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