Having a good home insurance policy in place is key to protect your home and it's belongings. But how do you work out how much home insurance cover you need? Too much and you could be overpaying. Too little and you might find some key features aren't covered. Here's what you need to know.
If your home suffers structural damage or if something happens to your belongings, you want to be able sort it with minimal fuss and cost.
Both policies act as a safety net if something should happen.
But how do you work out how much insurance cover you need? If you have lots of valuable items, you might need a specialist contents insurance policy.
Likewise, if you have a home that’s got an unusual structure, you might need a specialist buildings insurance policy. You should think about this when you’re deciding how much cover you need.
But working all of this out might be confusing. Here’s what you need to know.
Compare home insurance quotes
How much is home insurance?
According to our research, the average cost of home insurance per year is £141.88*.
A single buildings insurance policy costs £121.82, on average, and a contents insurance policy costs £61.21 per year on average*.
But this will vary for everyone. Some people might need more cover for valuable items, such as jewellery or furniture.
Others might have a home with an unusual structure - like a thatched roof for example - which may need more cover.
All these factors could affect the price you pay for your home insurance.
What does buildings insurance cover?
As we briefly mentioned, buildings insurance covers most structural issues to do with the house. It should also cover any permanent fixtures, like light fittings, walls, floors and pipes.
For example, if a tree fell onto your roof then your buildings insurance policy would usually cover the repair.
Most buildings insurance policies would also cover issues related to subsidence. That’s unless your home has had subsidence before, in which case, you’ll need to chat to your insurer.
What does contents insurance cover?
Contents insurance covers your belongings such as sofas, televisions and laptops to name a few.
For example, if a pipe burst and destroyed your sofa, it’s likely your contents insurance policy would cover it.
Usually it covers items up to £1,000. For anything over this, it might be worth considering extra insurance for your high-value items.
How much buildings insurance do I need?
When you’re getting a quote for your buildings insurance policy, the main thing that you need to find out is how much it would cost to rebuild your home from scratch.
This isn’t based on your home’s value when you bought it, or even what it’s worth now. It could be much lower than that.
This is because when a house is sold, it’s location, catchment areas and land are factored in when a house is on the market.
When you look at the rebuild cost, it’s more likely to be based on the cost of building a like-for-like property.
Factors like home improvements could affect the rebuild cost. For example if you’ve had an extension built, this would have to be rebuilt if your home was destroyed.
Older houses or those with non-standard construction, like some Victorian properties, would usually command a higher rebuild cost. The rebuild cost might also vary over time.
There are a couple of ways you can calculate your rebuild cost. If you’ve recently got a mortgage, you should have a home valuation, which usually lists what it would cost to rebuild your home. Or you could use the ABI’s rebuild cost calculator.
The rebuild cost is known as the ‘sum insured’. It’s worth working this out when you’re about to get a home insurance quote or if you’re renewing. Having this figure should ensure you have the correct amount of cover.
Other types of buildings insurance
Non-standard construction buildings insurance
As we’ve briefly touched on, some insurers might charge you more if your home isn’t standard construction. For example, a thatched roof, or made from wattle and daub.
On these occasions you might need to seek out specialist home insurance, as some insurers might not offer the right level of cover, or even offer it.
Listed buildings insurance
It’s a similar situation with listed building. These are houses with special historic interest. According to Historic England, there are around 400,000 listed buildings in England.
These are split into grades:
- Grade I: these are buildings with exceptional historic interest. Only 2.5% of the 400,000 are Grade I.
- Grade II*: Are buildings that have particularly important buildings with more than a significant historical interest. 5.8% of the buildings in the 400,000 are Grade II.
- Grade II: These are of special historic interest and every effort is made to preserve them.
If something should happen to a listed building, you’d need specialist materials and expert tradespeople to repair it. A listed building insurance policy should cover this.
Read our guide on the different types of buildings insurance for more information.
How much contents insurance do I need?
Working out how much contents insurance you need can sometimes be a bit of a headache. Particularly if you have high-value items.
It’s worth looking around your home and listing the items that you think are valuable. This includes your TV, sofa, rugs and games consoles to name a few.
Even things you might not necessarily think of, like kitchen equipment or expensive cutlery should go on the list too.
Remember, these are items you’d want to replace if they were destroyed, so be thorough with your list.
You can find a room-by-room breakdown of items you might want to cover in our guide on calculating how much contents insurance you need.
It’s important to be accurate with this. If you underestimate you might end up with not enough cover. If you overestimate, you might find that you’re paying too much.
How do I work out how much contents insurance I need?
If you’ve kept your receipts for any white goods, your sofa, even small electrical items, this is a good place to start.
You could also do a quick search online to see how much your item retails for to give you a basic guide price.
Another option is using our contents calculator.
Insuring high-value items
Some contents insurance policies have an upper limit for the cost of an item. For example, if you had jewellery worth over £1,000.
In situations like this, it’s worth considering extra cover.
Some items in your home should be easy to value after a quick search.
This might not be so easy if you own antiques or paintings. In this case it’s worth seeking out professional advice when it comes to a valuation.
What home insurance cover do I need if I rent?
Luckily you shouldn’t have to worry about buildings insurance if you’re in rented accommodation. This is your landlord’s responsibility.
But as we mentioned, your possessions aren’t covered under buildings insurance, so it’s worth considering contents insurance.
If your rented accommodation is furnished -for example, it’s already kitted out with sofas and white goods - you shouldn’t need to get contents insurance for those items. Your landlord should have cover for these, but it’s worth double checking with them.
But if you’re bringing in your own sofa, oven or white goods, getting a contents insurance policy should cover them if they get damaged.
You might also want to consider getting cover for your own belongings such as your clothes and gadgets.
*Feb 2021 data - top average premiums by product type excluding quotes with claims or accidental damage.