Insurance is a policy that you pay in installments that protects you from financial loss, it’s a form of risk management.
There are two types of house insurance; building insurance and contents insurance. Some ‘home insurance’ policies encompass both, but typically they are split and you will need to obtain both once you purchase a home.
Here is the difference…
This is usually mandatory when you take out a mortgage, as the mortgage company wants to know that if your house burns down you have financial means to rebuild the house and continue paying their money back.
To note – this is not officially a legal requirement to have building insurance.
Building insurance protects permanent fixtures in your home such as a bathroom, kitchen fittings, and your roof. If you have outdoor space, building insurance also usually covers outbuildings, sheds, garages and greenhouses.
If your house is listed, or it isn’t your primary residence, the options are slightly different and will need to be slightly more tailored to your situation (security, maintenance etc). Click here for more information.
This is for the belongings inside your home, anything that can be picked up basically. Content insurance protects your ‘things’ from theft, fire damage or water damage.
Typically for contents insurance, you will need to specifically name only big ticket items in your home, the possessions you may need to claim on if they get stolen or broken, for example a £1,000 TV.
Things to pay particular attention to if you take out contents insurance:
- Fine art
- Expensive technology gadgets
- High value jewellery
Tenant and landlord insurance
There are many other types of household insurance, such as tenant and landlord insurance. These cover different elements (either you own the house but don’t live in it, or live in it but don’t own it) so there are different requirements.
If you are a tenant, whether you are a student of a professional, you will likely want to be more pedantic when it comes to contents insurance because you won’t necessarily have control over the security/you may live with people you don’t know and so the risk is increased.
Information sourced from the Confused website