What is buildings insurance?
Buildings insurance covers your house in case of a disaster where your house is so badly damaged that it needs to be completely rebuilt. The event which caused the damage must have been completely beyond your control, for example storm or flood damage, a major fire, smoke or explosions, water leakage/burst pipes, subsidence, or third party vandalism or damage etc.
Why do you need buildings insurance?
Mortgage providers will insist that you take out this cover, as it means they will be able to recover their losses in such events. It is like a type of security or collateral for the loan that they have given to you.
What is contents insurance?
Contents insurance covers all items in your house which are not fixed to the property, for example your furniture, jewellery, appliances and clothing. Most of the available contents insurance policies will even cover things like the contents of your refrigerator and freezer!
What types of contents insurance are available?
The cheapest type of contents insurance is indemnity insurance. This cover will replace exactly what was there before, so if you claim for a washing machine that was already three years old, you will be given a replacement washing machine that is three years old.
The more expensive “new for old” option will give you a brand new replacement of whatever gets damaged or stolen, thus you would get a brand new washing machine.
Contents insurance will cover you in most of the same situations as buildings insurance, but also includes theft. Again, any of these perils must have been beyond your control.