What is the difference between home insurance and contents insurance?

Home insurance in common terms can usually refer to two different policies. There is the home insurance or building insurance and then there is the contents insurance. Very often people have a combination of home insurance and contents insurance, but it is possible to just go with either policy. If you do pick just a single policy, it is crucial to understand what your specific policy really covers.

As mentioned above, home insurance is also known as the building insurance or house insurance. Under this policy, your home’s structure is covered. This includes anything from the permanent fixtures to fittings such as baths and toilets. It typically also covers possible fitted kitchens and other fitted decorative aspects, such as wardrobes and cupboards.

Often these home insurance policies also cover garages, garden sheds and greenhouses, but you should always check with your insurance provider first. If you build an extension later on, you won’t always get it automatically included in the policy. So, remember to communicate with your insurer if you alter your home’s structures.

This type of house insurance is not mandatory, but it is still very important to have. It doesn’t typically cover the value of the home, but it would cover the costs of rebuilding your property from scratch. In the case of your house being damaged or even destroyed by a natural disaster, home insurance can be a big lifesaver.

For instance, home insurance covered claims made during the floods in 2013. According to the Association of British Insurers, insurers received over 17,500 flood claims due to the disaster.

It is worth noting that there is some controversy around home insurance for homes liable to flooding. If you live on or near a flood plain, be sure to check your insurance covers you, and consider the impact on your home insurance if you’re planning to move to such a location.

On the other hand, your contents insurance is a policy that covers almost everything you have inside the house, as well as any garden furniture you may have. The typical items included are televisions, home electronics like computers, furniture, kitchen equipment, carpets and even clothes.

Make sure your policy includes cover for garden equipment or belongings in sheds if you need it.

Although there has reportedly been a near 25% fall in household thefts, content insurance is still a good policy to have. If you are the victim of theft, your home insurance wouldn’t cover the theft of the specific items. When getting contents insurance you should evaluate your contents carefully. Many people underinsure their home contents, which might see you being denied your claim altogether or not receiving the full sum of the value of goods lost. The Financial Ombudsman Service has great information on underinsurance.

Many policies will also insure laptops, mobile phones, and other belongings that you may take or use out of the house, like bicycles, so check if you need the cover or if it comes as standard.

At this point you should also check any individual gadget insurance and even the services provided by your bank, as you might already be covered, and end up paying for something you don’t actually need, as you couldn’t claim twice anyway!

A great way to think about the difference, as well as the importance of each policy, is by using the metaphor of turning your house upside down. If you would turn it upside down and give it a gentle shake, your contents insurance would cover everything that falls out. What is left, part of the structure, would be covered by the home insurance.

You’ll most likely feel that both of these aspects are important to you and therefore, in many instances, a combination of building insurance and contents insurance works best. If you rent, check who has the responsibility of insuring the building, as this will usually be the landlord and apply as part of their landlord insurance.

To discuss your motor insurance and to obtain a competitive quotation, call Reader’s Digest Insurance Services today on 0208 069 3102.