Global Insurance

There's no such thing as a standard home insurance policy. Each insurer offers varying levels of cover and different exclusions. However, they make it a little easier to compare by dividing home insurance into two sections, buildings and contents, which you can buy separately or together.

Buildings insurance
If you are a homeowner, your name is on the mortgage, but the deeds are firmly held by the Mortgage Bank, they will probably make it a condition of the mortgage that you have buildings insurance. Buildings insurance usually covers more than just the main building. Outbuildings and garages can be covered, plus pretty much everything that's a permanent fixture outside, including gates, fences, drives and swimming pools.

But there are many exclusions for all these extra things. To take an example, gates and fences are not usually covered for storm or flood damage. Another example is that in order to make a subsidence claim for your swimming pool, the main building also has to be affected. With those sorts of exclusions in mind, buildings insurance usually covers damage caused by: flood; subsidence; heavy storms; fire; smoke; lightning; vandalism and theft or attempted theft; escape of water and oil; falling trees and branches, and falling aerials and satellite dishes.

You can get other cover that some insurers include in the basic price and others charge extra. This includes: the cost of using alternative accommodation if your home becomes temporarily uninhabitable; cover against your own liability if you injure someone or damage their property; and
glass, baths and wash basins.

Typically, you pay a £50 excess for most claims, although you'll pay more like £1,000 for subsidence claims. The insurer might offer a policy with a higher excess if it thinks there's a greater risk of you making a claim. Alternatively, you can ask for a higher excess in order to get a lower premium. If you wouldn't claim for any damage worth less than £100, it makes sense to increase the excess.

The amount you should insure your property for should be the rebuilding cost of your property and not how much it's worth on the market. You don't want to over-insure yourself.

The cost of under-insuring yourself is much more sinister. Let's say that the cost of rebuilding your property is £100,000, but you insure it for 20% less than this at £80,000. If your house burns down your insurer will only put £80,000 towards the rebuilding costs.