What is home insurance?
Home insurance splits into two products. Buildings insurance covers the structure — walls, roof, floors and permanent fixtures. Contents insurance covers what you would take with you if you moved.
Buildings cover is not a legal requirement, but virtually every UK mortgage lender makes it a condition of the loan.
How cover is calculated
Buildings cover is based on rebuild cost, not market value. Rebuild cost is what it would take to demolish and rebuild your home, including professional fees and site clearance.
Contents cover is based on the total replacement cost of your belongings as new, which most people underestimate by a wide margin.
Worked example
A three-bed semi in Bristol valued at £340,000 may have a rebuild cost of only £190,000 — insuring for market value would mean paying for cover you can never claim.
A typical three-bed household has £35,000 to £55,000 of contents once clothing, kitchen equipment and electronics are counted.
Types of home cover
Buildings only
Suits landlords and anyone whose contents are covered elsewhere.
Contents only
The standard choice for tenants and flat owners where the freeholder insures the structure.
Combined
Buildings and contents from one insurer, usually 10-20% cheaper than two separate policies.
Specialist and non-standard
Thatched roofs, listed buildings, flood-risk postcodes and unoccupied property need specialist insurers.
Who needs which policy
Your tenure decides most of it.
- 1
Homeowners
Combined buildings and contents, with accidental damage added.
- 2
Tenants
Contents only — the landlord insures the structure, never your belongings.
- 3
Flat owners
Check the service charge; buildings cover is usually arranged by the freeholder.
- 4
Landlords
Landlord insurance, which adds property owners' liability and loss of rent.
What insurers ask about
Answer these accurately or risk a reduced settlement.
Property age and construction: Non-standard construction such as timber frame or concrete panels changes the price.
Flood and subsidence history: Past claims at the address must be declared even if they predate you.
Security: Locks to BS3621 and an alarm can reduce contents premiums.
Occupancy: Homes left empty for more than 30 to 60 days usually fall outside standard cover.
How to compare home insurance
Focus on the limits, not the headline premium.
- 1
Single item limit
Standard policies often cap any one item at £1,500. Jewellery and bikes need specifying.
- 2
Accidental damage
Rarely included as standard, and it is what most household claims actually are.
- 3
Alternative accommodation
Check the cash limit — a serious fire can mean months out of the property.
- 4
Excess
Subsidence usually carries a separate £1,000 excess.
Combined policies: pros and cons
Pros
- Cheaper than two standalone policies
- One excess if a single event damages structure and contents
- One renewal date to manage
- Simpler claims handling
Cons
- You cannot shop each element separately
- High-value items may still need specialist cover
- Switching means moving both products at once
Why underinsurance is the biggest risk
If you insure for less than the true rebuild or replacement cost, insurers can apply 'average' and reduce every claim proportionally — not just the large ones.
Rebuild costs have moved sharply with materials and labour inflation, so a sum insured set five years ago is very likely too low today.
Exclusions that catch people out
Gradual damage — damp, wear and tear, and slow leaks — is excluded by almost every policy.
Escape of water claims are often reduced if the property was left unheated and undrained over winter.
Add-ons worth the money
A few extras genuinely earn their premium.
Home emergency cover
Pays for a call-out and temporary repair for boiler failure, burst pipes or lost keys.
Legal expenses
Covers disputes with neighbours, contractors and employment matters, usually for £20-£30 a year.
Personal possessions
Extends contents cover to items taken outside the home, including phones and bikes.
FAQs
About this guide
Written and reviewed by the Grow Your Business team, and kept up to date as rates, rules and provider terms change.
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