While home insurance isn’t a legal requirement, it’s sensible to protect your home by taking out both buildings and contents insurance. There’s a good chance you’ll need it at some point; UK insurance providers pay out a massive £8.1 million every DAY to reimburse householders. The Association of British Insurers has released data showing exactly how much is paid out to householders through their home insurance policies. As the voice of the UK’s insurance industry, the ABI represents more than 200 member companies across the UK.
Why is home insurance so important?
Your home is probably your most valuable possession. Not only is it a place to live, but it also contains all your belongings and memories. It makes sense that having the relevant insurance cover is vital to your peace of mind and future in the event of a problem.
Even with the most modern security protection, there’s still a chance that theft or damage, including natural disasters such as floods, can cause problems for householders. When a burglary, fire, lightning strike, flood, or some other problem seriously impacts your life, you will need home insurance to get back on track.
When it comes to obtaining a mortgage, or re-mortgaging, the lender might insist you have buildings cover at the very least as a condition of lending you money – the mortgage lender is at risk too if you don’t have buildings insurance, as their money is secured against your property.
What if you’re a landlord?
If you have a mortgage, whether you’re a homeowner or a landlord, it’s likely your mortgage lender will have insisted you have buildings insurance cover in place. It is normally a condition of signing up for a mortgage loan. This policy will cover the building’s structure and any permanent built-in fixtures.
As a landlord, you are responsible for taking out buildings insurance for your portfolio of rental properties. Although it’s not mandatory, you would be taking a huge risk without it. In the event of a serious problem, you would be liable for the full costs of any building repairs. Without insurance, this could easily put you out of business.
When you’re a landlord with a buy-to-let mortgage, you should look into a specific landlord insurance policy – an ordinary home insurance policy will be unlikely to offer you the right level of cover.
If you’re a landlord renting out a furnished property, it is also sensible to take out contents cover for expensive items such as fridge-freezers, washing machines, beds, sofas, and other large items. Your tenants will have to take out their own contents insurance for any items they have brought with them.
Many insurance providers will offer tailored landlord insurance to include both buildings and contents insurance. Check with various providers to find the best deals to match your circumstances.
At the end of the day, it’s your choice whether to take out contents insurance. As it covers the valuable items you have put in your tenants’ properties, it pays to have everything covered. After all, you don’t know what might be happening in your absence and accidents can occur all too easily.
What if you don’t get insurance cover?
It can be tempting not to bother getting insurance protection, but could you afford to replace all your furniture if you had to do so? Whether you’re a landlord or a homeowner, the importance of taking out the relevant cover is equally important.
If you own your home outright and don’t have a mortgage, you will not be subject to a mortgage lender’s requirement to take out buildings insurance cover. However, your home will undoubtedly be your biggest asset, so why wouldn’t you have it covered? For peace of mind, it’s far better to pay out a relatively small sum for an insurance premium than to lose everything to flood, fire, or theft.
If you’re privately renting, the landlord should have taken out the building’s cover, but you may wish to take out insurance yourself for any of your own furniture or other items that you have brought into your home.
As a general rule, if you’re a tenant, check your tenancy agreement to make sure you know exactly what is required of you in terms of insurance to avoid problems later.
What can impact an insurance quote?
If you have bought property in an area that’s hit by flooding, insurers might consider you to be in a high-risk area. When you’ve already encountered the heartbreak of your home and contents damaged by floodwater, the last thing you want is a price hike for your insurance.
Flood insurance is usually included as standard in a regular home insurance policy. The buildings insurance will cover flood damage to the property’s structure and contents insurance will cover water damage to the furniture and other belongings – the policy usually covers flooding caused by an unusually high amount of rainfall or a river that has burst its banks. If insurers consider you are in a high-risk area, however, you will need to take out specific flood insurance.
A new initiative, called the Flood Re scheme, has been launched for people who live in flood risk areas. Aimed at bringing down insurance costs for properties in high-risk areas; the joint scheme is run by the insurance industry and the government.
When you make an insurance claim for flood damage, your insurer will cover it and then Flood Re will reimburse the insurer to keep the costs in high-risk areas manageable.
Where are the UK’s high areas for flood insurance claims?
The most commonly affected UK city is Hull, where 5.9% of insurance quotes declare the applicant has previously been flooded. The national average is only 0.7%, so this is a high figure. The next most flood-prone city is Carlisle at 3.1%; followed by Lancaster, where 2.6% of applicants have experienced floods.
The places in the UK least likely to suffer flooding are Crewe and Luton, where 0.2% and 0.1% of residents respectively have experienced flooding, according to data from Money Supermarket collected between January 2020 and January 2021.
To find out whether your property is in a flood-risk area, check the government’s online flood map by entering your postcode. You will be able to see the level of risk, if any. You can also sign up for free advance flood warnings, while the Environment Agency can provide you with a property’s history and whether there has been flooding in the past.
What will flood insurance cover?
Flood insurance cover for the building will usually stretch to any flood-related costs such as drying out the interior of your property; restoring fixtures and fittings, from kitchens to lights; removing any debris; and paying for any fees as a result of the flood such as surveyors, architects and legal fees.
Your contents insurance should cover any damage to your belongings such as carpets, settees, tables and other furniture, televisions, computers and any high-value items that you have added to your insurance. For example, you might have a single-item value limit. This means you may have to individually add any particularly valuable items such as jewellery, watches, mobile phones, games consoles or sports equipment when you apply.
If your furniture is badly damaged, Furniture Rental Online can help with our emergency insurance furniture. We can assist insurers, loss adjusters, claims handlers and individuals who have suffered flood or fire damage by providing temporary furniture.
When looking for home insurance, no matter what your personal circumstances, the key is to shop around and always read the small print. Comparison websites can come in handy.