What is Building and contents Insurance?
Buildings and Contents insurance is the insurance you take out to protect your home and is designed to cover damage to the property or its contents and will pay out money in the event of a validated claim to repair your home or replace your contents. Dependent on your circumstances you may need to speak to a specialist adviser.
Building and Contents Insurance is classed as general insurance and general insurance covers events that may or may not happen, such as an accident, fire or theft, as opposed to life assurance that covers an event that will definitely happen sooner or later, such as retirement or death.
What is Building Insurance?
Building and Contents is the insurance you take out to protect your home, for instance if your roof collapses. When you move home everything you take with you is typically covered by contents insurance and everything left behind comes under buildings insurance, for example, the pipes, the windows and the bricks etc. The insurance company will cover these items for reasons such as if the roof is damaged by a storm or the pipes burst. The insurance company can arrange for someone in the relevant trade to get out to your home, no matter what time of day or night. The aim of Buildings and Contents Insurance is to cover the repair or damage to your property and some insurance companies may even cover the additional costs, such as a hotel bill while repairs are being carried out or the call out charges to request a plumber at 3am.
What is Contents Insurance?
Buildings and Contents is the insurance you take out to protect your home, for example, should someone steal your television. If you could turn your house upside down and shake it, everything that fell out, such as furniture, electrical equipment and white goods would be classed as contents, basically everything that when you move you will probably take with you. When you claim on the contents part of your insurance plan the insurance company will allow you to replace or repair the item. There are many options available, such as new for old or indemnity, which can be chosen to suit every budget.
What is Home Insurance?
Buildings and Contents is the insurance you take out to protect your home and your possessions.
What other insurance should I take out when buying a home?
Mortgage Life Cover
When you take out a mortgage, many people will take out life cover alongside the mortgage to cover the mortgage amount should they no longer be around to cover their mortgage repayments. Some mortgage lenders even insist that you take out life cover as they want to make sure that should anything happen to you and you pass away, the lender is able to reclaim the money they have loaned you. The mortgage lender could in theory reclaim your home however this is not always straight forward and can cause various problems for the lender which they do not want so insist that you take out life cover so that in the event of your death they will receive a lump sum pay-out to clear your mortgage.
If you have an interest only mortgage then a level term plan would be ideally suited to you. As the capital does not reduce over the term of your mortgage neither does the life insurance. This means that the sum assured that you take out when you start your mortgage will be exactly the same as on the last day.
A level term plan can also be used effectively if you have a repayment mortgage and in the event of your death you want to clear your mortgage and leave some extra money for your loved ones. If you are fortunate enough to be mortgage free, you can still apply for a policy and the level term life plan can still pay out a lump sum to your family in the event of your death. A level term plan is great as you know that no matter what happens the sum assured will always be the amount you agreed at the start of the plan.
A level term plan is also a favourable way of protecting a personal loan or car finance. By being able to leave a specific amount when you die the people left behind will be able to cover any debts or loans you may have.
A decreasing mortgage insurance plan will decrease throughout the term of your plan. The repayment mortgage plan is normally suited to people with repayment mortgages. The life insurance plan is the cheaper plan when compared to level term mortgage insurance. This is because the sum assured reduces throughout the term of the plan.
The premium for a decreasing mortgage plan is cheaper from the outset however over time your sum assured will decrease but your premium payment will remain the same, for example, if you take out a policy for £200,000 over a term of 20 years, your plan will pay out £200,000 if you were to die in the first year of having your policy. Ten years down the road your still paying the same premium however your cover would now only pay out approximately £100,000.