Home Owners Buildings and Contents Insurance

What is buildings and contents insurance?

Buildings and contents insurance is placed under the bracket of home insurance. It is a combined insurance that will cover or replace any damage that might occur to the house or its contents, including loss. It is essential for all mortgaged houses, and the majority of other homeowners who do not have a mortgage will also have this type of insurance. It is possible to get the two insurances separately, although you will find that most providers offer them as a combined cover.

• Buildings insurance – This insurance covers your house in case of a disaster where your house is so badly damaged that it needs to be completely rebuilt. The event which caused the damage must have been completely beyond your control, for example storm or flood damage, a major fire, smoke or explosions, water leakage/burst pipes, subsidence, or third party vandalism or damage etc. Mortgage providers will insist that you take out this cover, as it means they will be able to recover their losses in such events. It is like a type of security or collateral for the loan that they have given to you.

• Contents insurance – This covers all items in your house which are not fixed to the property, for example your furniture, jewellery, appliances and clothing. Most of the available contents insurance policies will even cover things like the contents of your refrigerator and freezer! The cheapest type is indemnity insurance. This cover will replace exactly what was there before, so if you claim for a washing machine that was already three years old, you will be given a replacement washing machine that is three years old. The more expensive "new for old" option will give you a brand new replacement of whatever gets damaged or stolen, thus you would get a brand new washing machine. Contents insurance will cover you in most of the same situations as buildings insurance, but also includes theft. Again, any of these perils must have been beyond your control.

Why do I need this type of insurance?

Some mortgage suppliers will make this type of insurance compulsory when you take out a mortgage with them, to cover their loan. Otherwise, this insurance is highly recommended to protect you against unforeseen circumstances. Virtually every home in the country will have this type of insurance just for that reason, and it could end up proving to be very costly if you do not take the cover out.

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