HOW MUCH HOME INSURANCE DO I NEED?

How much buildings insurance do you need?

When you’re working out how much buildings insurance you need, remember it’s all about the cost of rebuilding your home, not its market value.

Here’s a guide to help you through:

Rebuild Cost, Not Market Value

The amount you insure should be based on what it would cost to rebuild your home from the ground up.

This is often less than what you paid for your house or its current market value, mainly because it doesn’t include the value of the land your home is on.

Finding Your Rebuild Cost

There are a couple of ways to get this number:

• If you’ve recently applied for a mortgage, the valuation report you received should include a rebuild cost. This is a handy reference.
• If you don’t have this information, you can use a tool like the rebuilding cost calculator from the Association of British Insurers (ABI). It gives you an estimated rebuild cost based on your home’s details.

Different Insurance Policies

Insurers have various ways of determining the insured amount.

• Some use what’s called a ‘bedroom-rated’ policy, which bases the insurance amount on the number of bedrooms in your home.
• Others offer policies with an ‘unlimited value’, meaning they don’t require you to figure out the exact rebuild cost. This can be a convenient option if you’re unsure about the rebuild value.

So, when you’re deciding on your buildings insurance, make sure you’re covering the rebuild cost – this ensures you’re not underinsured or overpaying. And remember to revisit this calculation if you make significant changes to your home, like an extension, as this could affect the rebuild cost.

How much contents insurance do you need?

When figuring out how much contents insurance you need, it’s crucial to make sure you accurately assess the value of your belongings. This ensures that, in case of a loss, you have enough insurance to replace them.

Here’s a guide on how to calculate the right amount:

1. List Your Items: Go through each room in your home, including less obvious places like the loft or garage. Make a detailed list of all your belongings – from furniture and appliances to clothes and personal items.
2. Estimate Replacement Costs: For each item on your list, estimate how much it would cost to buy a new one. This is important because contents insurance typically covers the cost of replacing your belongings with new ones.
3. Total Your Estimates: Add up the replacement costs of all your items to arrive at your total estimated value. This is the amount of coverage you should aim for in your contents insurance policy.
4. Use Online Tools: Many websites offer contents insurance calculators that can help streamline this process. These tools guide you through listing and valuing your possessions.
5. Special Valuations: For unique or high-value items like antiques or expensive jewelry, consider getting a professional valuation. This ensures you’re not undervaluing these items in your insurance coverage.
6. Check Policy Limits: Be aware that some insurance policies have limits on the amount you can claim for a single item. If you have items that are worth more than these limits, you might need to arrange additional cover for them.

By taking these steps, you can make sure you have sufficient contents insurance to cover all your belongings at their current replacement value.

How much is home insurance?

The cost of home insurance varies based on several factors related to your property and your specific needs. Here’s what influences the price:

1. Type of Property: The nature of your property – whether it’s a house, flat, or something else – affects insurance costs.
2. Value of Your Contents: The total value of everything inside your home, from furniture to personal items, plays a significant role in determining the price of your policy.
3. Level of Cover Required: The more comprehensive your coverage, the higher the cost. Basic policies are cheaper, but they offer less protection.
4. Optional Extras: You can customise your policy with additional features like accidental damage cover, home emergency cover, or legal protection. These extras provide more extensive coverage but will increase the overall cost of your insurance.

Before purchasing any insurance policy, it’s crucial to thoroughly read and understand the policy details, including the costs. This ensures you select a policy that provides the right level of protection for your needs and budget.