Home Insurance

A Quick Look at Home Insurance Policies

Protecting your investments is always a very real concern, and this very same principle holds just as true for your home. Whether you are concerned about theft, a fire, a flood or you have valuable contents, there is indeed a policy to suit your needs. We should also point out here that without this type of protection, most UK lenders will not approve a mortgage or a second mortgage. The good news is that home insurance plans do not have to be complicated. Let's take a look at the three basic options to select as well as some of the factors to take into account before committing to a specific policy.

The Variants of Home Insurance

Home insurance can be broken down into three separate options. These are:

  • Building insurance
  • Contents insurance
  • A comprehensive plan

As the name hints, building insurance is intended to cover your physical property. This includes concerns such as windows, doors, a roof, plumbing, bathrooms and electrical work. These tend to be the most common plans, as they are generally quite amenable in terms of the associated rates.

Contents insurance is instead concerned with your property within the home (as opposed to the structure itself). Contents insurance is a great idea if you own valuable antiques, expensive cars or a substantial amount of jewellery. We should mention here that this policy will NOT address damage to the structure or the property.

Comprehensive plans are a combination of both building and contents insurance. This will cover against fire, theft and similar unforeseen circumstances. There can also be times when you are able to include an addendum which includes accidental damages (such as incidents involving construction or if you plan on renting the home out to tenants).

The Importance of Interest Rates

Home insurance plans can be attached to either variable or fixed interest rates. These are important to take into account, for rates ultimately determine your monthly premiums. The benefit in regards to fixed rates is that the premiums will always be predictable. Variable rates will increase or decrease depending upon the Bank of England. This could result in you paying more or less; depending upon the prevailing rates themselves. Try to determine which option will be the best and discuss this choice with the insurance provider.

Things to Take into Account

First, you should make it a point to see what type of protection is included in the policy. Additionally, is there a financial limit in terms of settlements. Another critical area to address is whether or not you will enjoy lower rates if no claims are filed over time. Some policies will NOT cover a home that is unoccupied for a long period of time. Finally, ask about the excess (this is the amount of money that you are require to pay every time a claim is filed). Determining this excess will help you to appreciate the payouts in the event of a claim.

Please feel free to use this article as a handy checklist when deciding upon a specific home insurance plan.