How To Choose The Right Home Insurance - Tips for Every Homeowner

Home insurance serves as essential protection for what is likely to be one of your most substantial investments. While there is no legal requirement to insure your home, it does shield you from the financial repercussions of unexpected events such as fire, theft and various natural disasters. 

In this article, we’ll demystify home insurance, explore the different types and cover the factors that affect premiums. We’ll also offer tips on how you can select the appropriate coverage for peace of mind.

Let’s get started.

What are the different types of home insurance?

Home insurance in the UK comes in three types.

Building Insurance

Building insurance covers the physical structure of the home (bricks, mortar, tiles, etc.) and any permanent fixtures such as kitchen units.

If you plan to borrow money to purchase the home, most lenders will require building insurance as a condition of the mortgage. But even if the home has been paid off, it's good practice to have such a policy in place.

Renters and leaseholders should note that in most cases, the landlord is responsible for building insurance.

Contents Insurance

Combined/Comprehensive Insurance

Combined insurance incorporates both building and contents insurance. 

You could take out separate policies for both the building and its contents. However, a combined policy often includes a discount and can make the claims process easier.

In a recent consumer research study it was identified, the median cost of a quarterly combined insurance policy was £213.

Factors that influence home insurance premiums

Several factors influence the cost of home insurance premiums in the UK. 

Ultimately, these reflect the various levels of risk associated with insuring different properties and homeowners

Location impacts your home Insurance

Properties located in areas prone to natural disasters or crime may be considered riskier and attract higher premiums.

Property type and age impacts your home Insurance

The type of property (detached, semi-detached, etc.) as well as its age and construction materials can also impact insurance costs. 

Older properties or those built with non-standard materials may be more expensive to insure due to the increased risk of structural issues or damage.

Does the security featured impact your home insurance

Homes equipped with burglar alarms, deadbolts and security cameras are generally seen as lower risk by insurers. 

Installation and maintenance of these features can sometimes lead to discounts on insurance policies.

Do you have a claims history as this could impact your insurance

Like car insurance, your claims history can affect the premiums on your house insurance. In other words, a history of frequent claims may indicate a higher likelihood of future claims, leading to increased premiums.

How rebuild costs can impact your home insurance

Insurers calculate premiums based on the estimated cost to rebuild your home from scratch in the event of total destruction. 

Factors such as the size of the property and the cost of labour and construction materials can influence the rebuild cost.

Choosing the right insurance

The first step to choosing the right home insurance is to determine what type of property you want covered.

We touched on this earlier, but in short, different types of insurance may be applicable for:

• Rented or leased accommodation.

• Property you own.

• Non-standard properties, such as listed buildings, thatched houses and those with flat roofs.

• Large or expensive homes – particularly homes worth over £1 million or with more than 6 bedrooms.

• Holiday homes, and

• Unoccupied homes.

Research and compare policies

Research and comparison of the various policies is key. Familiarise yourself with the policy features, coverage limits and exclusions to ensure they meet your requirements. 

Furthermore, consider additional features that may enhance your policy such as accidental damage cover, home emergency cover and personal possessions cover (which protects certain items outside of the home).

Consider the excess

A lower excess will increase your home insurance premiums, while a higher excess will do the opposite.

Many insurers set an excess at around £200, and some may set a compulsory excess in certain circumstances.

If you have a problem with subsidence, for example, the compulsory excess may be set at £1000. Similar excesses also tend to apply for other high-value claims.

Tips for how to save money on home insurance

Aside from combining building and contents insurance, there are several ways to save cash on your policy.

Look for discounts

It pays to search out discounts or incentives offered by insurance providers. 

These may include discounts for home security measures, bundling home and car insurance policies or loyalty discounts. Otherwise, check comparison websites for the best deals.

Think about the payment frequency of your home insurance - Do you pay annually?

Some insurers may offer discounts if you pay annually, while others may waive the administration fee.

Monthly repayments may feel more manageable than an upfront sum. However, many insurers add interest to each payment in the form of an annual percentage rate (APR). This rate may add as much as 10% to your monthly bill.

The benefits of being when choosing home insurance

Home maintenance is something we know is beneficial yet often neglected for one reason or another. However, a bit of proactiveness can reduce the likelihood you’ll need to make a claim (and pay excess) in the future.

Some simple measures include testing your smoke alarms, insulating pipes, clearing gutter obstructions and ensuring security systems are functioning well.

Taking all into consideration when choosing home Insurance

If you spend most of your life saving up for a deposit and paying a mortgage, it makes sense to protect your home with the right insurance. 

Compare different products to obtain the best deal and ensure the excess is manageable. Where possible, pay for insurance upfront each year to save money on interest.

Comprehensive insurance that combines building and contents cover is best suited to homeowners. Renters and leasers may only need contents insurance, and there are also options for expensive homes, holiday homes and non-standard properties.

We hope this article has gone some of the way to helping you find a home insurance policy that aligns with your budget and needs!