The main question you need to ask yourself when thinking about the topic of Home Insurance is ‘Can you afford to rebuild your home and replace all your belongings’?
In most cases, presumably the common answer would be no. A person’s home is usually the largest asset they’ll ever own, and it most cases a person’s home is crammed full of personal and valuable items that may be difficult or too expensive to replace. So doesn’t it make sense to have some sort of backup plan in place in case some sort of disaster was to occur?
I know it’s easy to think that home insurance may be pointless, and that something like a fire or a burglary are highly unlikely, but some facts (UK based) may make you think again.
- Every 37 seconds a home somewhere in Britain is burgled.
- Every year there are over 1 million burglaries and attempted burglaries.
- 20% of households experience more than one incident a year. 13% are burgled twice and 7% three or more times.
- Around 49,000 homes fall victim to fire each year.
- 1 in 6 properties in England and Wales is at risk of flooding.
- The average flood claim can be anything between £20,000 and £30,000.
If you didn’t already know home insurance can be broken down into two sectors; buildings insurance and contents insurance.
Buildings insurance covers your house in case of a disaster where the structure of your house is damaged. It covers damage to walls, roofing, windows and doors, drains, pipes, out buildings such as garages etc. It will also cover the permanent fixtures in your home such as kitchen units, fitted wardrobes and bathroom suites. Most buildings insurance policies will cover a home from a variety of damaging situations, for example damage caused by fire, lightning, explosions, earthquakes, smoke, riots, theft, subsidence, storms and floods.
Contents insurance on the other hand covers personal belongings, or can generally be classified as items you’d take with you if you were to move home. For example furniture such as sofas, curtains, desks/tables, beds. It also covers personal money you have in the house (usually up to a certain amount) as well as valuables like TV’s, computers, IPod’s, Jewellery etc. Again these are covered against loss or damage from fire, lightning, explosions, earthquakes, smoke, riots, theft, subsidence, storms and floods. Most insurance policy providers also give additional cover for accidental damage, for example dropping/smashing something etc.
Article by Hector Gaynikillies, a freelance personal finance writer.