Imagine coming home from a long day of work to find your home has caught on fire. You watch helplessly as fire fighters struggle to put out the blaze. But it is too late. By the time the fire is extinguished, your home is a pile of rubble and with it, all of your belongings. What do you do?
If you have building and contents insurance, you are already on the way to recovery. You just file a claim with your insurance company. The insurer will pay the cost of repairing or replacing your home. Some policies will also cover the expense of alternative housing until you have a habitable home again.
Contents insurance covers replacing the items within your home. This type of insurance will cover more than just fire damage. Policies vary in the exact disasters they will cover, but can cover floods, storm damage, burglary, vandalism and, in some cases, damage from water pipes which have burst.
It is estimated that as many as one fourth of United Kingdom households are not covered by insurance. When you consider the fact that statistics say that one in three people will be burglarised at some point during their lives, not to mention the odds of other less avoidable disasters, this is a scary thought. If you are uninsured, you are taking a risk every single day.
Many mortgage lenders now require borrowers purchase and maintain a policy of building and contents insurance. This is to protect their interest in the home. If the home is destroyed, they want to be sure they still receive the money they are owed.
Contrary to what many believe, this type of insurance is not only for those that own their home and live in it. Those who have purchased properties to rent for income can obtain building insurance alone. Likewise, those that rent such properties can purchase contents insurance.
Aside from the separate and combined policies, there are also add-on options which you may want to consider. New replacement is an often over looked add-on. Many insurance policies only cover replacement or market value. If your home or its contents have depreciated in value since its purchase, you could be left short of funds to fully replace them.
Other add-ons include cover for items taken outside of your home, such as jewellery or mobile phones, legal expenses in case someone is injured on your property, freezer contents replacement, which covers an established amount if your food becomes inedible due to power loss or freezer malfunction and cover for items on your property but not in your home, such as garden equipment kept in a storage shed.
Whilst you may prefer to go with the lowest priced policy, it is important to fully understand exactly what it covers. You do not want to find out after a disaster has occurred that it is not covered by the policy or your policy limits are not high enough to cover replacement. With the right building and contents insurance policy, you can feel confident that you are protected against disaster.
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