Household insurance
Got anything nice in your house? Better start thinking about insurance.
There are two basic types of household insurance; contents insurance and building insurance. Contents insurance covers the contents of a home such as furniture, carpets, clothes, television, refrigerators, jewellery and so on. In other words, what you would take with you if you moved. Buildings insurance protects against damage to the actual structure of the home and to its fixtures and fittings. Contents and buildings policies can be bought separately or together in one package.
Contents Insurance
Everyone needs contents insurance, even if living in rented accommodation or sharing with friends. Tenants are responsible for their own property and they should make sure they have insurance against the risk of damage by fire, storm, or flood. There are of course other dangers which affect rented as well as owner-occupied homes, think of burglary for example. Unfortunately many people, particularly those living in rented property, ignore these dangers. About one in four households in Britain has no contents insurance at all. Policies vary between insures. They give cover to the contents while they are inside the home and, in some cases, while they are outside in the immediate surroundings of the home. Most policies extend to give limited cover for contents which are temporarily away from the home. For example in the UK they may be at your place of work or at a holiday hotel.
Contents insurance covers damage from a very wide range of risks. These include:
- Fire;
- Theft;
- Escape of water from tanks or pipes;
- Oil leaking from fixed heating systems;
- Storm;
- Flood;
- Riot or malicious damage;
- Explosion;
- Lightning impact by aircraft, vehicles or animals;
- Falling trees;
- Subsidence and earthquake.
A contents policy also covers the loss of rent or the additional cost of alternative accommodation if the home is made uninhabitable. Contents cover includes accidental breakage of mirrors and glass in furniture and there is some cover for damage to rented property where the tenant is liable for this.
An important extension of contents insurance covers the legal liability of the occupier. Liability could arise if other people are injured or their property damaged as a result of the occupier's negligence. This is a little known but very important fringe benefit of household insurance. If, for example, a householder carelessly let a dog run free and caused a serious road accident, then the householder - and not the car drivers - could be legally liable and face an expensive bill for damages and legal fees. Many household policies also offer cover for any legal expenses to sue someone or if you are sued.
Buildings Insurance
Buildings insurance covers the structure of the house including fixtures and fittings, together with garages and outbuildings. There is limited cover for boundary walls, gates, paths, drives and swimming pools. In general, anything that would be left behind if the occupier moved is included in buildings insurance. If you're renting, buildings insurance is paid by the landlord, not you.
The policy should cover damage caused by:
- Fire;
- Explosion;
- Lightning;
- Earthquake;
- The impact of aircraft vehicles or animals;
- Theft or attempted theft;
- The breakage of aerials;
- Oil leaking from a central heating system.
It also covers damage caused by riot and malicious persons, storm, flood, the escape of water from tanks or pipes, subsidence, landslip or heave, and falling trees. The cover for subsidence involves an excess and many policies have an excess on other sections such as theft or flood.
Buildings insurance can't cover everything. Exclusions often include storm or flood damage to gates and fences, and frost damage. If the home is left empty or unoccupied for over 30 days malicious damage, water leakage and theft won't be covered. Other exclusions are damage caused by war, rebellion and revolution.
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