A guide to home insurance
Listed below is a helpful guide to some of the terminology that you will encounter. You should read this prior to selecting a policy from the menu above.
What is buildings insurance
What is contents insurance
What cover is provided on a standard basis
What cover is provided on an accidental damage basis
What do specified and unspecified items mean
What is personal possessions insurance for renters
What is personal possessions insurance for students
What does no claims bonus mean
What does excess and voluntary excess mean
What does the term new for old mean
How can I protect my property
What is mid / high value home insurance
Buildings insurance usually covers the structure of your home and any fixtures or fittings, including out-buildings, garages, drives, walls, fences, swimming pools and tennis courts.
Insurance cover includes the cost to repair or rebuild your home if it is damaged. Standard cover is new for old and applies to specified perils, i.e. fire, lightning, earthquake, storm, flood, burst and leaking pipes, theft, vandalism, collision by vehicles, aircraft and animals, falling trees, subsidence, heave or landslip.
Cover can be on either a standard basis or an accidental damage basis.
Contents insurance is cover for all of your household contents, i.e. furniture, carpets, curtains, television, stereo, kitchen equipment, ornaments, personal possessions, clothing, computers, etc. It is the total value of everything that is in your home that you would take with you if you were to move. The contents value does not include fitted furniture, e.g. fitted wardrobes and fitted kitchens, as these items are included under the buildings insurance. A contents value of £20,000 is the minimum amount for most household contents insurance policies and is insufficient for most people. A likely average is £40-50,000.
With most contents insurance there is the ability to insure your personal possessions for all risks. This optional cover allows you to insure your personal items normally worn or carried outside the home, e.g. watches, cameras, jewellery anywhere in the world for up to 60 days a year.
Contents cover can be on either a standard basis or an accidental damage basis.
Standard cover is to replace items on a new for old basis and applies to specified perils such as fire, theft, lightning, earthquake, etc. It is important to calculate the value of items to be insured on a new basis, not wear and tear, i.e. calculate the full replacement value.
Accidental damage cover includes the standard cover aswell as providing cover for items accidentally dropped, scratched or broken, i.e. spillages on the carpet or electrical equipment, etc.
Unspecified items are usually items under the value of £1,000 each. However, camping equipment, dentures, pedal cycles (over the value of £400), musical instruments used for professional or semi-professional purposes, firearms and freezer contents cannot be covered under unspecified items. These need to be specified. Nb: unspecified items can also include other items and equipment, the list varies from insurer to insurer.
Specified items are usually items over the value of £1,000 each, such as jewellery or watches, or items that cannot be covered as unspecified.
Personal possessions insurance for renters provides cover for the possessions of single people or couples, either living alone or in shared accommodation.
You can insure possessions with a total value of between £3,000 and £15,000 on a new for old basis. Optional additional cover available includes cover for your possessions when away from the home.
Personal possessions insurance for students provides cover for your personal possessions with a total value between £2,000 and £5,000 whether you are living in halls of residence, on or off campus flats or shared houses. Cover is also provided for the items you take outside of your room.
No claims bonuses are awarded according to the number of years you have held home insurance in your own name and have not made a claim. Discounts do vary from insurer to insurer but usually range from 10% for one claim free year up to 30% or more after and up to three years.
Excesses are the amounts of a claim that you have to pay. Generally with household insurance policies the insurers will not pay the first £50 of a claim.
In some cases you may elect to pay a voluntary additional excess for a reduction in the premium.
The term new for old means that in the event of a claim the damaged item would be replaced at today's price with no deduction for wear and tear. It is important that when calculating your sums to be insured you use the same basis.
Many insurers offer premium discounts for improved security. Having good quality locks, an approved burglar alarm, being a member of a police-approved neighbourhood watch scheme and being in the property during daylight hours can all mean a cheaper premium.
Mid / High value home insurance is a special type of insurance formulated for people with property and possessions of significant value; usually homes with rebuild costs over £250,000 and contents over £75,000 plus personal possessions.
With high value home insurance a superior level of cover is provided. Benefits can include, world wide cover, cover for all risks, warranty-free cover, new for old cash settlements, no under-insurance penalty after a loss, etc. To read about the insurers of high value homes or for further information visit Unique benefits of High Value Household Insurance.
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