Buildings and contents insurance

A wise safeguard against major disasters and minor mishaps

Even though it’s not legally required, taking out buildings and contents insurance cover is a very wise step if you’re a homeowner. Most mortgage providers also require that buildings insurance is in place before they’ll lend you money to buy a property.

Buildings and contents insurance pays towards rebuilding costs if your home’s physical structure is damaged by fire, flood or any other risk. Depending on the specific policy, buildings and contents insurance can also extend to features such as patios, driveways and septic tanks.

Buildings insurance

When deciding on the amount of buildings insurance cover you need to take out, consider the ‘building reinstatement value’ rather than your home’s current market worth. This is how much a builder will charge to rebuild your home if it has been totally destroyed.

When calculating this, make sure you include all costs such as clearing debris, labour and building materials. You should also consider the cost of reinstalling important features like double glazing, solar panels and central heating.

Home contents insurance

Imagine what you’d have to replace after a fire or other disaster. It could include everything from clothing and furniture to jewellery, IT equipment, audio-visual gear and so much more. This cost could be far higher than you imagine, so calculate the value of each room’s contents. Then ask yourself if you could afford to replace everything.

There are two types of home contents insurance: 

  • New for old insurance covers the cost of everything as new.
  • Indemnity cover pays the current value of your items. This means it considers how they have depreciated and only pays a percentage of their replacement cost.   

When you consider the cost of replacing everything, the importance of building and contents insurance is clear to see. 

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