Home insurance protects your biggest asset — your property and everything in it. Whether you are a first-time buyer or a long-standing homeowner, understanding the difference between buildings and contents cover, knowing how much you actually need, and picking the right policy can save you thousands of pounds over the years.
Types of Home Insurance
Buildings Insurance
Buildings insurance covers the physical structure of your home — walls, roof, floors, ceilings, windows, doors, fitted kitchens, bathrooms, and permanent fixtures. It also typically covers outbuildings, garages, fences, gates, and driveways.
If your home were destroyed or seriously damaged, buildings insurance would pay to repair or rebuild it. Mortgage lenders require buildings insurance as a condition of the loan — without it, you cannot complete on a property purchase.
Contents Insurance
Contents insurance covers your personal belongings — furniture, electronics, clothing, jewellery, appliances, and anything you’d take with you if you moved. It protects against theft, fire, flood, and (optionally) accidental damage.
Combined Policies
Most insurers offer combined buildings and contents policies, which are often cheaper than buying the two separately. If you own your home, a combined policy is usually the simplest and most cost-effective option.
What Buildings Insurance Covers
| Covered | Typically Excluded |
|---|---|
| Fire, smoke, and explosion | General wear and tear |
| Storm and flood damage | Gradual deterioration |
| Burst or leaking pipes | Pre-existing damage |
| Subsidence, heave, and landslip | Damage from poor maintenance |
| Falling trees and aerials | Deliberate damage by the policyholder |
| Vandalism and malicious damage | Damage caused during renovations (unless notified) |
| Vehicle or aircraft impact | Mechanical or electrical breakdown |
Important: Buildings insurance covers sudden, unforeseen events — not ongoing maintenance issues. A leaking pipe that bursts suddenly is covered; a pipe that has been dripping for months causing gradual damage is not.
What Contents Insurance Covers
Standard contents policies typically cover:
- Theft (including theft from outbuildings, usually with limits)
- Fire, flood, and storm damage
- Vandalism
Optional extras worth considering:
- Accidental damage — covers everyday mishaps like spilling coffee on a laptop or a child breaking a window
- Away from home cover — protects belongings taken out of the house (e.g. a laptop stolen from a café or luggage lost on holiday)
- High-value items — individual items above a certain value (often £1,000–£2,000) need to be specified separately
How Much Cover Do You Need?
Buildings Insurance: Rebuilding Cost
Insure your property for its rebuilding cost, not its market value. The rebuilding cost is how much it would cost to completely reconstruct your home from scratch, including materials, labour, architect fees, and site clearance.
The rebuilding cost is almost always lower than the market value because it excludes the value of the land. You can find this figure:
- On your mortgage valuation report
- Using the BCIS rebuilding cost calculator (from the Royal Institution of Chartered Surveyors)
- From a professional surveyor’s report
Contents Insurance: Room-by-Room Valuation
Most people significantly underestimate the value of their belongings. Go through each room and list everything — furniture, electronics, clothing, kitchenware, books, toys, decorations, and valuables.
A typical three-bedroom house often has contents worth £35,000–£55,000. An accurate valuation ensures you are not underinsured and can replace everything if the worst happens.
Reducing Your Premiums
Home insurance premiums have risen in recent years, but there are proven ways to keep costs down:
- Compare quotes every year — never auto-renew without checking the market. Loyalty rarely pays.
- Increase your voluntary excess — raising your excess from £100 to £250 or £500 can noticeably reduce premiums. Just make sure you can afford to pay it if you need to claim.
- Improve home security — fitting British Standard locks (BS3621), a burglar alarm (ideally NACOSS or NSI approved), and window locks can cut premiums significantly. Some insurers require these for cover to be valid.
- Pay annually — monthly payments usually include interest charges of 10–20%, making annual payment much cheaper.
- Avoid claiming for small amounts — a £150 claim on a £250 excess costs you money and pushes up future premiums. Reserve insurance for significant losses.
- Don’t over-insure — check your rebuilding cost and contents value so you are not paying for more cover than you need.
- Consider a higher buildings excess for subsidence — subsidence claims carry a standard excess of £1,000, but increasing it can reduce premiums in high-risk areas.
Making a Claim
If you need to make a claim, act promptly:
- Notify your insurer as soon as possible — most policies require notification within a set timeframe
- Document everything — take photos and video of the damage before any repairs
- Keep receipts — for damaged or stolen items and any emergency repairs
- Don’t throw anything away — the insurer may need to inspect damaged items
- Get repair quotes — the insurer will usually want to approve costs before work begins
- Consider independent loss assessment — for large or complex claims, an independent loss assessor works on your behalf (not the insurer’s)
New for Old vs Indemnity Policies
- New for old (also called replacement as new) — pays to replace damaged items with brand new equivalents, regardless of age. This is the standard for most modern policies and generally better value.
- Indemnity — pays only the current second-hand value of the item, accounting for age and wear. Payouts are typically much lower. Some policies use indemnity for certain items like clothing.
Always check which basis your policy uses. New for old is strongly preferred.
Leasehold Properties
If you own a leasehold flat, the freeholder is usually responsible for arranging buildings insurance for the whole block, with the cost passed to leaseholders through the service charge. You should still:
- Check that adequate buildings cover is in place
- Arrange your own contents insurance — this is your responsibility
- Consider whether your lease requires you to maintain any specific cover
Renting: Do You Need Contents Insurance?
If you are renting, your landlord’s insurance covers the building and their fixtures — but not your belongings. Tenants’ contents insurance is inexpensive (often £5–£15 per month) and well worth having to protect your possessions against theft, fire, or water damage.