Home insurance protects your property and belongings against damage, theft, and disasters. If you have a mortgage, your lender requires buildings insurance. Contents insurance is optional but highly recommended.
Buildings Insurance
Covers the structure of your home — walls, roof, floors, fitted kitchens, bathrooms, and permanent fixtures like boilers and built-in wardrobes.
What’s covered:
- Fire and smoke damage
- Flooding and storm damage
- Subsidence and landslip
- Vandalism and malicious damage
- Falling trees and branches
- Aircraft or vehicle impact
What’s NOT covered:
- Wear and tear or gradual deterioration
- Damage from DIY or renovations (unless you notify your insurer)
- Faulty workmanship
- Fence panels and gates (usually excluded or limited)
- Damage from pets
Required by: Most mortgage lenders insist on buildings insurance before they’ll complete your mortgage.
Contents Insurance
Covers your personal belongings — furniture, electronics, clothing, jewellery, and anything you’d take with you if you moved house.
What’s covered:
- Theft and attempted theft
- Accidental damage (if included)
- Fire and flood damage
- Storm damage
- Vandalism
- Items lost or damaged away from home (usually up to a limit)
What’s usually limited or excluded:
- High-value items (jewellery, watches, art) over £1,000-£2,000
- Cash (usually limited to £200-£500)
- Bicycles outside the home
- Business equipment
- Wear and tear
Combined Policies
A combined policy covers both buildings and contents in one policy. Usually cheaper than buying separate policies.
| Policy Type | Typical Annual Cost |
|---|---|
| Buildings only | £100-£150 |
| Contents only | £50-£100 |
| Combined | £150-£250 |
Tip: Combined policies are best for homeowners. If you rent, you only need contents insurance.
How Much Cover Do You Need?
Buildings Insurance: Rebuild Cost
Your buildings cover should be based on the rebuild cost — what it would cost to reconstruct your home from scratch. This is NOT the same as market value.
| Home | Market Value | Rebuild Cost |
|---|---|---|
| 3-bed semi-detached | £280,000 | £180,000 |
| 4-bed detached | £450,000 | £250,000 |
| 2-bed flat | £180,000 | £120,000 |
The rebuild cost excludes land value, which doesn’t need insuring. Use the BCIS rebuild cost calculator or your mortgage valuation for guidance.
Contents Insurance: Replacement Cost
Insure your contents for replacement cost — what it would cost to buy everything new today. This is “new for old” cover, meaning a 5-year-old sofa is replaced with a new one.
Quick contents inventory (typical 3-bed house):
| Category | Estimated Value |
|---|---|
| Furniture | £8,000-£15,000 |
| Electronics | £3,000-£8,000 |
| Clothing | £4,000-£10,000 |
| Kitchen appliances | £2,000-£5,000 |
| Soft furnishings | £1,000-£3,000 |
| Miscellaneous | £2,000-£5,000 |
| Total | £20,000-£46,000 |
Most people underestimate their contents by 30-50%. Walk through each room and add up what you’d need to replace.
Understanding Excess
Excess is the amount you pay towards a claim. It’s made up of two parts:
| Type | Description |
|---|---|
| Compulsory excess | Set by the insurer based on your risk profile |
| Voluntary excess | Amount you choose to pay (on top of compulsory) |
Example: Compulsory excess £100 + voluntary excess £250 = £350 total excess per claim.
Increasing your voluntary excess from £100 to £500 can reduce your premium by 15-25%. But only choose an excess you can comfortably afford.
Common UK Home Insurance Claims
| Claim Type | % of All Claims | Average Payout |
|---|---|---|
| Escape of water | 25% | £3,000-£5,000 |
| Theft | 15% | £2,500-£4,000 |
| Storm damage | 12% | £2,000-£6,000 |
| Accidental damage | 10% | £1,500-£3,000 |
| Fire | 8% | £15,000-£30,000 |
| Subsidence | 5% | £20,000-£50,000 |
Key tip: Burst pipes are the most common claim. In winter, know where your stopcock is and keep heating on low when away.
Worked Example: 3-Bed Semi-Detached
Property details:
- 3-bedroom semi-detached house
- Market value: £280,000
- Rebuild cost: £180,000
- Contents value: £40,000
Recommended cover:
| Policy Element | Amount |
|---|---|
| Buildings insurance | £180,000 |
| Contents insurance | £40,000 |
| Voluntary excess | £250 |
| Accidental damage | Included |
Annual premium: Approximately £180-£220 for a combined policy.
Monthly cost: £15-£18 per month to protect your home and everything in it.
Tips for Getting the Right Cover
- Don’t underinsure — if you claim for £50,000 but your cover is £30,000, you only get £30,000
- Check rebuild cost — not market value. Use BCIS calculator or ask a surveyor
- Add accidental damage — costs 10-15% more but covers spills, cracks, and DIY mishaps
- Compare quotes annually — loyalty doesn’t pay. New customers often get better deals
- Protect no-claims discount — if you’ve built up several years without claims
- Declare home improvements — extensions, loft conversions, or new bathrooms increase rebuild cost
- Keep receipts and photos — essential for making a claim
- Check policy exclusions — know what’s not covered before you need to claim
Where to Buy UK Home Insurance
Comparison sites:
- MoneySupermarket
- CompareTheMarket
- GoCompare
- uSwitch
Direct providers:
- Aviva
- Direct Line
- LV=
- Churchill
- Admiral
Tip: Always read the policy documents, not just the summary. Key exclusions and limits are in the small print.
Summary
| Key Point | Takeaway |
|---|---|
| Buildings insurance | Covers structure — required by mortgage lenders |
| Contents insurance | Covers belongings — recommended for everyone |
| Combined | Usually cheaper than separate policies |
| Buildings cover | Based on rebuild cost, not market value |
| Contents cover | Based on replacement cost (new for old) |
| Excess | Higher voluntary excess = lower premium |
| Don’t underinsure | Most common mistake — check rebuild cost |
| Compare annually | Shop around at renewal for best price |
References: MoneyHelper, Which?, Association of British Insurers (ABI)