Buildings and Contents

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Buildings Insurance

Having suitable home insurance will be a condition on your mortgage when you take it out. You do not have to take out your policy with your building society/lender, unless you have agreed to a special mortgage package, which includes their own insurance. The 'sum insured' is the maximum amount the insurance company can pay you. It must be the full re-building cost of your property. The exact amount you will need to cover your property can be found on your valuation report you would have received before you moved in. Any significant under-insurance could mean that your claim might be reduced or even rejected altogether.

Contents Insurance

Contents policies also have other sections such as liability insurance, legal expenses and freezer contents to cover those extra risks likely to happen. Usually to have these sections added to your policy may require an extra premium. A wide range of contents policies is available. The cheapest of all is the 'indemnity' policy. This takes into account the amount for wear and tear. So, if your five year old carpet was ruined by leaking water, the pay-out would reflect the age of the carpet. Costing a little more is the 'new for old' policy. With this policy you will be paid the full cost of a brand new carpet to replace the five year old one.

 

 

More than Home Insurance

 

Cost

Your postcode is important both for buildings and contents insurance. Insurers may find that your postcode area is more prone than others to subsidence damage, or the losses from theft or winter weather. Some insurers operate a no-claim discount system when policies are renewed with them. Check on your renewal notice to see if this applies.

Extra Cover

You can add onto your policy 'accidental damage' which could come in useful if your 3-piece suit was accidentally damaged by paint or by such things. If you want to widen your cover to 'accidental damage' then an extra premium will be payable. 'All Risks' is cover for any household items you regularly take out of the house, binoculars, cameras etc. These can be listed in the policy under an 'All Risks' section, again an extra premium is payable.

Liability

Householders - like everyone else - must exercise reasonable care in everything they do. If you are careless or negligent, and cause damage to someone else or their property - then you could be held 'legally liable' - perhaps for a great deal of money. Contents and buildings policies cover you against this risk. The buildings policy covers you as owner of your home while the contents policy covers you as its occupier.

Type of Insurance	What is it For?	Is it right for you?
Home Buildings Insurance	Covers the cost of repairing or rebuilding your home if it’s damaged or destroyed	Yes, everyone who has a mortgage should have this cover (though if you live in a flat you might pay for it out of the service charge instead).
Home Contents Insurance	Covers the cost of repairing or replacing your possessions if they’re damaged, destroyed, lost or stolen.	Yes, if you could not otherwise afford to replace your possessions. For information about insurance products, look on the Association of British Insurers (ABI) website at www.abi.org.uk

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