Insurance
This content applies to Scotland only.
Housing laws vary between Scotland and England. Get advice relating to England
This page looks at the different kinds of insurance you need to take out to protect your home and cover you in case anything goes wrong.
Why do I need insurance?
Insurance protects you against the risks of every day life. If something goes wrong, you can claim on your insurance and it will pay for the damage to be put right. For example, if your home is flooded you can claim on your buildings and contents insurance to pay for the repairs and replace your belongings.
In return for this cover, you pay a premium to the insurance company. This may be a one off payment (as in the case of travel insurance) or a yearly or monthly payment.
If you're lucky, you'll never need to make a claim, but if something does go wrong, insurance can save you thousands of pounds.
Where can I buy insurance?
You can buy insurance almost anywhere - in your bank, online, over the phone or even in the supermarket. You don't need to buy all your insurance policies from the same company, so it's well worth shopping around to find the best deals for you. There are many websites which allow you to compare different policies quickly and easily to find the one that's best for you. Try:
Bear in mind when you are comparing prices that different policies will provide different levels of cover and include different services. For example:
- some policies may make you pay an excess (or set amount of money) towards the cost of a claim
- some policies will offer you a no claims bonus if you don't make any claims within a set time limit
- some policies will cover you for a wider range of accidental damage
- some companies have a free telephone helpline you can call for advice.
Buildings insurance
If you own your own home, your mortgage lender probably won't lend you any money unless you have buildings insurance.
What is buildings insurance?
Buildings insurance covers any loss or damage to the structure and fittings of your home. This includes kitchen units, the bath and toilet, fitted carpets, and interior decor - in other words, the things that can't be removed. Remember, you'll need separate contents insurance to cover your furniture and belongings.
Buildings insurance should cover you for:
- fire damage
- storm and flood damage
- leaking or burst water pipes
- subsidence, heave and landslip (these affect the foundations of the home)
- earthquakes
- damage caused by vandals.
Buildings insurance has to cover the cost of rebuilding your home from scratch, for example if it burned down. Your surveyor will work out the rebuilding cost as part of your home buyer's report, as it won't necessarily be the same as the property's market value. This cost will go up over the years with inflation, and your insurer should allow for this. However, it's best to check your policy every few years, to make sure it is still adequate.
Your policy may well state that you have to pay an excess (or set amount of money) towards the cost of a claim. This will vary depending on the insurer, so check your policy carefully.
Where do I get buildings insurance?
You can ask your solicitor or mortgage lender to help you find insurance. Your mortgage lender will probably have their own buildings insurance you can buy, but unless this is included in your mortgage package, you may well be better off shopping around yourself.
Mortgage insurance
You may need to take out insurance in case you are unable to pay your mortgage, for example because you fall ill or are made redundant. There are several different types of mortgage insurance.
Contents insurance
If you own or rent your home, it's a good idea to have contents insurance to protect your furniture, electrical goods, clothes, carpets, curtains and other belongings. If you rent furnished accommodation, your landlord's insurance should cover anything which belongs to them, but you will still need your own insurance for your possessions. If you are a student, some insurance companies offer special reduced rates so shop around for a good deal.
You may save money if you take out buildings and contents insurance together. This is sometimes called household insurance.
What is contents insurance?
Contents insurance covers you if your belongings are stolen or damaged by fire, flood, subsidence or other accidents that aren't your fault. You can also choose to take out additional cover for accidental damage caused by you. So for example if your bathroom floor needed replaced because a water pipe burst, you could claim for a new floor on your insurance. If it needed replaced because you let the bath overflow, you would need accidental damage cover to claim on your insurance.
Some expensive goods, such as jewellery, art and antiques, may need to be insured separately. You can also extend the cover for items you take out of the home, such as jewellery, a laptop computer or a bicycle.
How much do I need to be insured for?
Your contents insurance needs to cover the cost of replacing all your belongings if they are destroyed, for example if your home burned down. This total cost is called the 'sum insured'. Make sure this sum is enough to cover the cost of replacing all your goods - if you buy something new, such as an expensive three-piece suite or a wide-screen TV, you may need to increase the sum insured.
Other kinds of insurance
You may also want to take out:
- life insurance (you can find out more about this on the page about mortgage protection)
- a pension
- medical insurance
- car insurance
- payment protection insurance (this covers your debts if you become ill or are made redundant)
- pet insurance
- insurance for your boiler or other household appliances.
