Do I Need Property Insurance?
There are plenty of costs involved when buying or renting a new home, so it is understandable that you would be reluctant to pay further fees on top of that. However, some costs do pay for themselves in the long run, and the alternative could be very expensive. If you’re wondering ‘do I need property insurance?’, here’s what you need to know.
What is home or property insurance?
Home or property insurance is a type of insurance that covers the costs of any unavoidable damage to your property and replacing your possessions. It can usually be paid either in monthly instalments or annually.
Is home insurance a legal requirement?
It is not a legal requirement to have home insurance and not taking out a home insurance policy comes at your own risk. However, while there is no legal requirement for home insurance, if you are looking to obtain a mortgage or are re-mortgaging your property, providers might insist that you at least take out buildings cover as a condition of lending to you, as this ensures a level of protection for their investment.
What are the different types of property insurance?
There are two main types of property insurance: contents cover and buildings cover. Each type can be taken out separately or a combined policy from the same insurer that covers both may be chosen. Each type of property insurance serves a distinct purpose and homeowners will require both for comprehensive cover.
Buildings insurance covers the structure of your property and fixed fittings such as bathrooms and kitchens, and some policies may include exterior buildings such as garages Buildings insurance covers the cost of repairing the damage that is caused by unavoidable occurrences such as a fire, storms, floods, falling trees, subsidence or vandalism.
Contents insurance covers your possessions inside the property, but not the physical structure or permanent fixtures. There are two main types of contents insurance; an indemnity policy and a new-for-old policy.
An indemnity policy pays out for the value of your item as it would have been at the time it was stolen, destroyed or damaged. This means wear and tear are taken into account, and the payout for an item that was five or ten years old would not be as much as if it were new.
A new-for-old policy, on the other hand, will provide a payout that will cover the cost of the item as if it were brand new in the current market.
Property insurance for rented properties
If you’re privately renting, it is the landlord’s responsibility to insure the building. Still, you may want to take out your own contents insurance, as the building insurance will not cover the cost of replacing your possessions if they be stolen or damaged by a fire or flood that affects the house.
Landlords should consider taking out specific landlord insurance that accounts for other people living in the building, which a standard buildings insurance will not.
Why should you get property insurance?
Property insurance provides peace of mind that, should anything happen to your property, you will not be left in the lurch. Most people don’t have the funds to rebuild their home and replace all the possessions inside should it get destroyed in a fire or flood. Even if they could, paying for the insurance would be much more affordable.
The property doesn’t need to be completely destroyed for insurance to be worth it either; even significant damage caused by a storm, or some key possessions being stolen would be better paid for out of an insurance plan rather than out of pocket.
Do you need property insurance? From a legal standing, the answer is there is no obligation. However, in terms of cost versus risk, it is difficult to dispute the benefits of covering the hard-earned investment that is your property. If you want to find the best deal, then please get in touch.