What is home insurance? Your guide

If you’re a homeowner, your home will likely be the biggest investment you make in your lifetime. Having home insurance in place can help to protect your home — both the building and its contents — against the unexpected.

But what is home insurance exactly? And what does home insurance cover?

Let’s have a look in more detail at what home insurance is, how it works, and the factors that might affect your home insurance premium.

The different types of home insurance

Home insurance is there to help you if something goes wrong in your home. This can include a range of issues that affect both the structure of your home and its contents.

But how does home insurance work, exactly?

There are generally three types of home insurance:

• Buildings insurance
• Contents insurance
• A combination of buildings and contents insurance

Buildings insurance

Buildings insurance covers damage to the physical structure of your home, such as the roof, floors, walls, and any permanent fixtures and fittings like doors and windows. Events that might cause this damage can include:

• Fire: An accidental fire in your home, or fire that spreads from a neighbouring property
• Flood: A burst riverbank or heavy rain
• Storm or severe weather: If tiles are blown off your roof in high winds
• Burst water pipes: If the pipes freeze and burst due to winter conditions
• Subsidence: When the ground under your home starts to shift or sink

Read more: Building insurance costs: The lowdown

Contents insurance

Contents insurance is designed to protect your personal belongings, including furniture and electronics, as well as smaller items like jewellery and clothing. With contents insurance, your belongings are covered against events like:

• Theft: If your belongings are stolen from your property
• Fire or water damage: If your belongings are damaged in an accidental fire or by a burst pipe

Your policy may cover your belongings for theft or damage outside of the home, or you may have to add this insurance to your policy at an additional cost. This is especially important for belongings you’re likely to carry on you, such as mobile phones or cameras. If you’re unsure, check your policy’s fine print or speak to your insurer.

Common exceptions to home insurance coverage

When you’re looking for home insurance, it’s important to read the policy documents before you take out a policy, so that you are really clear on what is and isn’t covered. But in general, home insurance policies don’t tend to cover things like:

• Normal wear and tear: Damage of structure or contents of your property caused by age or normal usage. 

• Negligence: Damage that has been caused by not properly maintaining your home or possessions. For example, if you have water damage caused by a gradual leak over time, that is generally considered to be poor maintenance that you should have fixed rather than a sudden event.

• Pest infestations: Most policies won’t cover damage by pests such as rats.

• Absence: You generally need to tell your insurance provider if you’re away from home for more than 30 days. This is because there’s considered to be a higher risk of theft or damage if nobody is at home. You may then need to take out unoccupied house insurance to ensure that you’re covered while you’re away.

Do I need home insurance?

Do you legally need home insurance? In a word, no. Home insurance is not a legal requirement like other types of insurance (like car insurance, for example).

But your mortgage lender is likely to make buildings insurance a requirement of your mortgage, so that the structure of your home is always protected. If you don’t have a mortgage and choose not to have home insurance, you put yourself at risk of a large bill if anything goes wrong in your home.

The average cost of home insurance has ranged from around £180 to £240 in the past few years, but it’s worth weighing this cost against the potential cost of an incident. In 2023 alone, insurers in the UK paid out almost £5 billion in property insurance payouts to homes and businesses.

Home insurance as a homeowner

If you’re a homeowner, or planning to become one, it’s important to make sure that you’re covered for buildings and contents insurance, since you are responsible for the physical structure of your property and everything in it.

If you’re applying for a mortgage, it is generally compulsory for you to have buildings insurance in place before your mortgage lender approves your loan. [Note to Howden: Please link to “Is home insurance mandatory?” once live] Your cover should start when contracts are exchanged. This applies to selling as well. If you are selling your house, you are responsible for buildings insurance until you complete the sale.

It’s also worth noting that how you own your property is relevant to your home insurance. That is, whether it’s a freehold or a leasehold:

• Freehold: you own the property and the land that it’s built on
• Leasehold: you own the property, but not the land it’s built on, for a set period of time that is agreed with the freeholder

If you don’t own the freehold, you may pay for buildings insurance as part of your service charge to the building owner. If you jointly own the freehold with others, you may need to have a joint buildings insurance policy with the co-owners. Your solicitor should be able to advise you on the best solution.

Home insurance as a tenant

In general, because your landlord owns the property it is their responsibility to have buildings insurance in place. They will be responsible for insuring and maintaining the permanent physical structures and fittings.

However you are responsible for your possessions inside the house, so as a tenant it’s a good idea to have your own contents insurance policy in place. This will ensure that you are covered in case of theft or disaster such as fire or flood damage.

Your insurer may have different policies depending on whether you rent by yourself, share your house, or wish to share a policy with your housemates.

How do I buy home insurance?

There are a number of important steps to take when buying home insurance.

• Decide how much cover you need. For buildings insurance, this will include evaluating the amount that you would need to cover the cost of rebuilding your home in case of a total loss. Your insurance provider can help you with this. For contents insurance, you might want to complete an inventory of your belongings to help you determine their total value.

• Tell your insurance provider what add-ons you are considering including in your policy, for example:
  • Accidental damage insurance, which can cover damage as a result of an accident, such as spilling coffee on the carpet or breaking a window.
  • Legal services cover, which can cover your costs in any legal issues as a result of your home ownership.

Make sure you read the fine print in your policy before buying, so that you know what is and isn’t included.

When you take out a home insurance policy, your insurer will use a range of information to calculate your premium. These include your home’s age (an older home may have a higher premium due to ageing materials that could lead to damage), its location, whether it’s a listed building, and other factors.

Your insurer also will want to know some basic facts about your lifestyle, including your age, the number of children you have, and whether you have pets. And they’ll look into your credit history and whether you have made insurance claims in the past.

There are often things that you can do to make sure you get the best value insurance policy and see the biggest home insurance benefits.

• Combine insurance: You can often bring your premium down if you get buildings and contents insurance on the same policy. You might save even more money if you take out car and other insurance from the same insurance company as well.

• Shop around: Make sure you compare prices, or use a broker to help you to find the best deal.

• Pay in a lump sum rather than in instalments: If you can afford to pay the whole premium upfront, it can mean that you pay less.

• Raise your voluntary excess: Increasing your excess can make your premium cheaper. The excess is the amount that you pay before your insurance company starts to pay your claim. If you can afford to raise your excess, then it’s likely that you will lower your premium.

• Improve your home security: If you have a security alarm, smoke detectors and strong locks, you may be able to decrease your premium.

How can Howden help?

At Howden, we pride ourselves on doing the work to support you with selecting home insurance to give you confidence and peace of mind. We have great relationships with a range of standard and specialist home insurers, so we can find and compare multiple policies on your behalf. We’ll also make sure that you fully understand the coverage of any policy before you buy, and make it really easy to claim if something does go wrong.

Over 50% of new home insurance customers at Howden saved an average of £179 between August 2023 and January 2024. Get in touch with our team today to make use of our tailored home insurance service.

Also read:

• How much is contents insurance?
• Building insurance vs home insurance: What’s the difference?
• Is your home flood-proof?

READ MORE OF OUR HOME INSURANCE GUIDES