Buildings
Rebuild cost is not market value
This is the mistake we see most often. Buildings insurance is based on what it would cost to rebuild your home from scratch, including demolition, clearance and professional fees. That figure is usually a good deal lower than what the house would sell for, because it does not include the land.
Insuring for the market value means paying for cover you cannot use. Insuring for too little means a claim may be reduced proportionally, so a 25% shortfall can mean a 25% cut to a payout on a partial claim.
Contents
What it would cost to replace everything
Most people underestimate their contents substantially. The usual advice is to walk through each room and add it up, because the total gets to a surprising number quickly once you include clothing, kitchen equipment and everything in the loft.
Watch the single item limit. Most policies cap individual items at somewhere between £1,000 and £2,500 unless you specify them separately, which catches people out on engagement rings, bicycles and laptops.
Options
Worth considering
A few extras that are usually inexpensive and occasionally invaluable.
- Accidental damage, which covers the wine on the carpet and the foot through the ceiling
- Personal possessions cover for items taken outside the home
- Alternative accommodation while repairs are carried out
- Legal expenses cover
- Home emergency cover for boilers, plumbing and locks
Buildings and contents insurance is general insurance. Cover, limits and exclusions vary by policy, so always read the policy summary.