Household insurance is made up of two parts, namely building insurance and contents insurance. The buildings and contents will be covered for loss or damage as a result of a number of “perils”. These perils or risks normally include the following: fire, smoke, lightning, explosion, theft, storm, flood, burst water pipes, earthquake, impact, riot and malicious damage.
Buildings insurance covers you for damage to buildings.
This part covers buildings which are generally defined as the main structure, including all domestic outbuildings, such as garages, greenhouses and garden sheds and also walls, gates, fences, paths, drives and swimming pools. Permanent fixtures and fittings, such as a fitted kitchen and built-in bedroom cupboards are included under the buildings cover.
The Buildings Section will provide cover against subsidence (with most companies) in addition to the loss of rent, accidental damage to service pipes, cables, glass in doors, windows and skylights and wash-hand basins and toilet fittings. It also provides cover for your legal liability as owner.
Contents insurance covers you for loss of or damage to the contents of your home.
This covers your furniture, furnishings, household goods, kitchen equipment and other appliances, food and drink, televisions, videos, computers and audio equipment, clothing, personal effects and valuables such as jewellery and personal money up to the stated limits.
The Contents Section includes legal liability as occupier and cost of temporary accommodation whilst the house is uninhabitable following an insured incident. Most contents policies also cover the personal legal liability of the policyholder and members of his/her family for accidents they may cause.
All companies offer various extensions in cover at additional premiums. The most common of these are:
Loss of personal money and credit cards;
Loss of food due to a breakdown of the freezer;
Accidental damage, loss or theft of pedal cycles;
Personal accident – this extension pays a monetary benefit in the event of accidental bodily injury which results in death or disablement of the policyholder or other named members of his family;
Caravans and boats – covering loss or damage to caravans or boats used for social, domestic and pleasure purposes;
Accidental damage to buildings and contents.
You should insure your home for the amount it would cost to rebuild it. This is different to the market value of your home, which is the amount you would get if you sold it. You can get details of current rebuilding costs from the Society of Chartered Surveyors.
You should insure your contents for the amount it would cost you to replace them if they were stolen or damaged. It is worth taking the time to calculate these costs so that you insure your contents for the correct amount.
Remember that if you extend or improve your home, you will usually need to increase the buildings cover on your policy.