Article by Tom Jones
Let’s face it; the average home owner nowadays is in debt. They’re paying off a mortgage, they’re paying off a car and most are paying credit card bills as well after having gone out shopping for a new flat screen TV, or the latest surround sound system.
You don’t often come across families any more who are willing to keep the same old fridge for twenty years. Instead, most couples replace household appliances continuously and this usually means they’re constantly in debt.
With all that debt around your neck, do you really believe you could afford to purchase a second home in the event your current one got ravaged by fire? Perhaps you’re unfortunate enough to get hit by flooding, something which seems to be happening ever more frequently in the UK lately. Sure, flood waters may not sweep your home away, but they’ll certainly cause severe damage to your property and possibly to your belonging as well.
With this in mind, is it really worth taking a chance, considering buildings and contents insurance is for the most part very affordable. After all, nobody can predict when a disaster will strike and neither can you be sure it’ll never happen to you. In fact, there was severe flooding in many parts of the UK just recently and one can only wonder how many of those who were affected are unable to rebuild their lives simply because they had chosen to go without insurance.
Buildings and contents insurance actually refers to two different types of insurance, although in the vast majority of cases, the two are provided alongside each other. This is mostly because people, who realise the importance of builds insurance, also realise how important contents insurance is and providing you get both types of cover from the same provider, a huge discount is usually made available to you. So, what are the main differences between the two types of cover?
Buildings insurance covers the structure of your property. In other words, it covers the building itself, together with all fixtures such as fitted kitchens, fitted bathrooms, fitted cupboards and etc. It also covers any outbuildings on the property, as well as your perimeter wall or fence. Ideally, when you take out buildings insurance, you need to make sure the amount you’re covered for is enough to rebuild your home if the need ever arises.
Generally speaking, the insurance company will advise you as to how much cover you require, bearing in mind that the cost of re-building is always less than the market value, simply because even if your home is destroyed, you’ll still have the land it stood on.
When purchasing contents insurance, you need to focus on what’s referred to as being the ‘sum insured’. Basically, this is the maximum amount of money your insurance company will pay in the event of a claim. Don’t be tempted to set this figure too high in the hope of getting more out of your insurance company. The insurance company will not pay out the full sum, but instead, they’ll pay you what they believe your possessions were worth, even though you would have been paying higher premiums. On the other hand, if you set the figure too low, the amount of money you receive won’t be sufficient enough to replace all your belongings. The key is to be as honest as possible and as accurate as possible.
Perhaps the most important thing of all when choosing home buildings and contents insurance, is that you need to shop around for different quotes and of course you really do need to make sure you understand exactly what is and what isn’t covered in a policy before you accept it. Remember, if you don’t fully understand your policy, you could end up providing your insurance company with an opportunity to avoid paying you out if you ever submit a claim.
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