As the worse nightmare imaginable, you probably don’t consider what would happen if your home burns down or floods. However, these are risks you can’t afford to ignore, especially as your home is likely your most valuable possession.
And while holding the adequate home insurance cover will allow you to claim back the cost of putting right any structural damage, having your home burns down will also take an emotional toll.
What’s the right way to insure your home?
As a condition of your mortgage, the lender will insist you cover your home with adequate building insurance in case your home burns down or is flooded.
Building insurance, as the name suggests, covers the bricks and mortar and structure of your home. It also includes permanent fixtures and fittings, such as the carpets, cables, drains, windows and light fittings.
If the structure of your home is damaged, whether by fire, flooding, subsidence or a fallen tree, then you can claim on your buildings insurance.
Contents insurance, on the other hand, covers anything within your home such as your furniture, clothes, jewellery and valuables.
While you must hold buildings insurance, there’s no such requirement with contents insurance. However, if you were to add up the cost of replacing everything item in your home and assume they would all be damaged or destroyed by fire, you would also want to purchase contents insurance.
Home burns down, what can I do?
If your home burns down, then your building insurance will cover the cost of rebuilding the property unless you’ve been negligent. For example, leaving a candle or fire burning on and going out for the day.
Your contents insurance will cover any damage and loss arising from the fire. Of course, neither cover the emotional impact even a small fire can cause to your home and possessions.
When you call the fire brigade, you’ll be given a fire report number to pass to your insurer. With this reference number, you should be able to start your insurance claim.
The insurance company will send a loss adjuster to assess your claim and calculate the cost of work required and replacements.
They are highly specialised as it can be challenging to assess the damage caused by fire as smoke and soot engulf any object in its path. The adjuster will look for structural damage, cosmetic works and what will need replacing.
You might not be able to see a charred flooring joist, but it’s just as important as repainting the room covered in soot. Not to mention, having the plumbing and electrics inspected before you turn anything back on.
When your claim is submitted, the loss adjuster will allow you to start cleaning up and throwing items away. You’ll need to resist this urge to until you get the all-clear as you might cause a delay with your claim.
Your insurer will either organise trades to complete repairs and work using its directory of preferred providers or will pay you the amount of your claim.
If your home burns down and forces you to move to alternative accommodation or need to move temporarily while work takes place, then your insurance should also cover this cost.
What about if my home gets flooded?
Your building insurance should cover any damage caused by flooding. Just like if your home burns down, you should immediately take steps to remedy the situation. This could mean calling out a plumber or moving to higher ground until the water past.
Once the immediate panic is over, you should start your insurance claim. Insurers are typically understanding and should reimburse the cost of emergency repairs, provided you save any invoices. This is unlike a fire where you have to wait for their adjuster to submit a claim.
Your insurance should also cover items damaged by flooding including kitchen appliances and flooring, lost or damaged household items, and stains. The insurer may want to send out a loss adjuster to your home, especially if you’re claiming extensive damage.
If you need to move to alternative accommodation, then your insurer should cover this cost too.
Subsidence damage, what can I do?
If the soil beneath the building’s foundation is unstable, any movement in the ground will cause your property to sink. Also, known as subsidence.
Most home insurance policies cover loss or damage caused by subsidence. However, they only cover the cost of repairing the loss or damage, not the cost of preventing further subsidence.
What home insurance covers and what it doesn’t
The top reason given by the Association of British Insurers that home insurance claims are rejected is not holding adequate coverage.
If the insurer can prove you were negligent, then they may reject your claim. For example, if your child accidentally starts a fire in your dining room and it quickly engulfs your property. Your claim could be rejected if your roof is damaged by a storm due to poor maintenance.
Your home insurance policy will exclude wear and tear, Acts of Terrorism, and claims made after you home has been left unoccupied for longer than agreed in your policy, typically 30 days.
What is the right amount of buildings insurance?
The typical buildings insurance policy should cover the cost of rebuilding your property if your home burns down, is flooded or destroyed, including labour and materials. However, be careful to only insure for the cost of rebuilding and not your property’s market value.
If you have just moved and had a RICS survey, then you should have a figure for the rebuild cost. You could use the Royal Institution of Chartered Surveyors’ free calculator, which is part of its Building Cost Information Service (registration required) to estimate the cost.
You could also speak to an insurance broker for help working out the rebuild value you need. Use Biba to find a local insurance broker.
Avoid under-insuring your home’s content
Many homeowners to overvalue their property when buying building insurance yet undervalue their belongings when purchasing contents insurance.
Being under-insured for whatever reason could cause major headaches if your home burns down or is gets flooded. It could result in you having to pay to cover any shortfall, an amount that could run into the thousands of pounds.
Your contents could be worth £60,000, yet you only have £30,000 (50%) covered by insurance. If fire damages half of your home’s content, the insurer may only pay out half of the insured amount. In this case, it would amount to £15,000 or only 50% of the actual value of items damaged.
You would need to find another £15,000 to put right the damage and return the home to a liveable condition. Finding this amount could be nearly impossible yet taking out the right insurance all of your contents correctly from the start might cost a few extra pounds per month.
How to calculate the correct level of contents insurance
To ensure you have enough cover, calculate the value of items in each room within your property. It might be worth drawing up a list of every piece of furniture, gadget, books and clothes found in that room. You may need to highlight any valuables such as jewellery and technology to your insurer.
Be proactive and make sure you have the right insurance in case your home burns down, floods or someone drive through the front window.