Costs and Coverage explained

Buying a home is one of the biggest and most significant investments you’ll make and taking out home insurance provides a safety net against a range of risks which could be out of your control and otherwise leave you facing our-of-pocket expenses.

As of 2024 there are around 35 million home insurance policies in the UK and the number of policies is increasing each year, showing more people seeing the importance of having a policy.

 

The Importance of Home Insurance

First and foremost, home insurance offers peace of mind. Life is unpredictable, and unforeseen events such as fires, storms, theft, or accidents can happen when you least expect them. Without insurance, the financial burden of repairing or rebuilding your home, replacing your belongings, or dealing with legal liabilities could be overwhelming. Home insurance ensures that, in the event of a disaster, you won’t be left shouldering the full cost on your own.

Additionally, most mortgage lenders require borrowers to have home insurance as a condition of the loan. This requirement protects the lender’s investment in the property, as well as your own. Even if you own your home outright, it’s wise to maintain insurance coverage to protect your assets and ensure your home can be repaired or rebuilt in the event of a disaster.

 

 

What Does Home Insurance Cover?

Home insurance policies typically cover three main areas:

  • Structure of Your Home: This coverage pays to repair or rebuild your home if it’s damaged or destroyed by events like fire, windstorms, hail, or other disasters listed in the policy. However, it’s important to note that standard policies do not cover damages caused by floods or earthquakes; separate policies are needed for these specific risks.
  • Personal Belongings: This part of the policy covers your furniture, clothing, electronics, and other personal items if they’re stolen or damaged in a covered event. Many policies also cover items stored off-premises and offer limited coverage for expensive items like jewellery, which may require additional riders or endorsements.
  • Liability Protection: If someone is injured on your property or you cause damage to someone else’s property, liability coverage helps pay for legal fees and damages. This can include medical expenses for injuries that occur in your home and legal defence costs if you’re sued.

 

How Much Does Home Insurance Cost?

The cost of home insurance varies widely based on several factors, including the location of your home, its value, the materials used in its construction, and your policy’s coverage limits and deductibles.

Go. Compare data shows the price of Home Insurance has been increasing and the median cost of a combined home insurance policy is £212 – up 31% from Q1 2023 when costs were £162.

Costs for buildings only policies have also risen in 2024 by 4.4%, however contents-only premiums have reduced with median prices falling by 4% from £67 to £63 at the start of 2024.

While it may seem like a significant expense, home insurance is a crucial investment in your financial security. By paying a relatively small annual premium, you can protect yourself from potentially devastating financial losses, ensuring that your home and belongings are safeguarded against the unexpected.