Household insurance has two parts - buildings insurance and contents insurance.

Building and contents insurance can be bought separately, though some insurance companies offer a single policy covering both which can save you money.

Top Tip

When buying a home, make sure that you have arranged for buildings insurance cover on your new home to start on the day you exchange contracts.

If you are not a first-time buyer, arrange for the buildings insurance on your previous property to continue right up until the day you exchange, in case the deal falls through.

Key Fact

If your home is part of a larger building, such as a block of flats, your buildings insurance may be bought in a joint policy by everyone in the building so you will only need contents insurance, or if it is a leasehold then the freeholder may have insurance - check up on these.

Top Tip

Insurance for items which you take outside your home such as bicycles, musical instruments, sports equipment and so on may also be included in your contents insurance.

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Household Insurance: Buildings insurance and Contents Insurance

Buildings Insurance

Buildings Insurance provides cover for the property itself, including basic essentials such as kitchen and bathroom fittings (sink, toilet, bath etc) and running water. It also provides cover for events such as fire, flood or even subsidence.

How much should your property be insured for? It is not the market value, but the amount it would cost to rebuild it. This cost shoudl include the costs of clearing rubble and architects' and surveyors' fees, as well as building materials and labour. Check your survey or valuation details for the rebuilding costs, which will be listed under the term 'reinstatement'.

Contents Insurance

Household contents insurance covers all your possessions inside your home. 'Contents' refers to everything from furniture and carpets to jewellery, cameras and clothes. It's up to you exactly what your insurance policy covers and the price depends on how much it covers. The policy will state an overall limit on the amount you can claim, called the sum assured, and there is also a minimum sum assured which is normally in the region of £30,000 although some insurers will quote for less.

To work out how much cover you need, make a list of everything in each room and how much it is worth or would cost to replace. Remember to include furnishings, carpets and other fittings, and clothes and food, as well as more obvious items like TVs and jewellery. Often insurance for items taken outside the home is set up to a general limit, so if you need extra cover for more valuable items then you will need to ask for this limit to be increased.

You can reduce the cost of your insurance premium by agreeing to an excess on any claim, on both buildings and contents policies. This is where you pay the first part of any claim; for example, if your TV is stolen and you have agreed to a £50 excess you receive the price of the TV minus £50. If you already have contents insurance on your previous home, make sure the cover is transferred from your previous home to your new one on the day you move in.