Which insurance do you need?
Buildings Insurance
Everyone needs buildings insurance to cover their home in case the building is damaged or destroyed. While you have a mortgage, the lender will almost certainly insist that you have this cover.
Some lenders insist you take insurance but don’t insist that you take the policy they can sell you. This is called ‘compulsory’ insurance.
Some lenders insist that you take out cover they arrange. This is called ‘tied’ insurance. Tied insurance is not usually the most competitively priced, and you could arrange cheaper insurance elsewhere.
Many lenders let you arrange your own cover but may charge an administration fee for checking the cover is sufficient. Some insurance providers will pay the fee for you.
Other lenders leave you free to choose your own insurance and do not make a charge, but will require their interest to be shown on any policy you arrange.
If you look at Section 9 of the mortgage Key Facts Illustration (KFI) we provide, or you Mortgage Offer from the lender, you will see if you have to arrange tied or compulsory insurance, whether you have to pay an insurance charge, and what optional insurance the lender may offer.
Contents Insurance
Contents insurance covers your household items, such as furniture and possessions against loss, damage or theft.
Care should be taken in calculating the true replacement value of your possessions, to avoid the potential undervaluing that could reduce any claim by a condition known as ‘averaging’ where an insurer could reduce the payout by the percentage you have actually insured for against the true value of your items.
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PROTECTION FOR THE PROPERTY |
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TYPE OF INSURANCE |
WHAT’S IT FOR ? |
IS IT RIGHT FOR YOU? |
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Buildings Insurance |
Covers the cost of repairing or rebuilding your home if it’s damaged or destroyed. |
Yes, everyone who has a mortgage must have this cover (though if you live in a flat you might pay for it out of the service charge instead). |
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Contents Insurance |
Covers the cost of repairing or replacing your possessions if they’re damaged, destroyed, lost or stolen. |
Yes, if you could not otherwise afford to replace your possessions. No, if you can afford to replace any lost, stolen, damaged or destroyed personal items. |
It is possible to have a combined ‘Buildings and Contents’ insurance policy, which may offer some cost savings if the policies were bought separately.
We have a wide range of insurers available to ensure you obtain comprehensive, competitive cover.
Contact us to discuss your requirements.
(Please don’t forget that the most important thing in the property is you! Are you insured properly? Click here to decide.)
