Anyone with a mortgage will know the importance attached to protecting probably your largest single investment - home buildings insurance will have been a condition of the mortgage being advanced in the first place.

Indeed, the protection of the physical fabric and structure of the property will have been so important that most banks and building societies will themselves offer to arrange your home buildings insurance. Whilst this might appear a convenience, you will almost invariably end up paying more for the insurance cover from this source (since the lender will also have taken some commission from the sale of the insurance).

Apart from the opportunity to earn commission on the sale of the insurance, another reason for the bank or building society's interest is because of the relatively difficulty in calculating what sum needs to be insured. Basically, this needs to be the cost of rebuilding the home following its total destruction. Depending on the location, age and state of the market, the cost of such rebuilding can be more or it can be less than an estate agent's valuation or the actual market value of the property. Naturally, the rebuilding cost - or the "sum insured" - is likely to rise in line with inflation, so most insurance companies will automatically increase the sum insured in line with the retail price index and vary the premiums accordingly.

The risks covered by home buildings insurance generally include the major hazards to the structure of the property such as fire, flood and subsidence, together with accidental damage to buried cables and pipes, glazed windows and doors and bathroom fittings. If the property is located in an area known to be prone to subsidence, however, the premiums are likely to be "loaded" accordingly.

As with most types of insurance, of course, the terms and conditions of home buildings insurance also varies from insurer to insurer. Some policies, for example, will also cover accidents that arise during do-it-yourself home improvements - others will not. Clearly, it is as well to know exactly what the policy covers before attempting such works.

When selecting the home buildings insurance that best suits your needs, it is also a good idea to enquire about any contents insurance also offered by the same insurance company since there will frequently be discounts for purchasing the two insurance packages together.

Given the variations between different products and the benefits in passing up your mortgage lender's offer to arrange the insurance for you, it can be somewhat daunting to arrange your own home buildings insurance directly with the provider. This is an area, therefore, in which the specialist expertise and knowledge of the market possessed by an insurance broker is certainly likely to help. A specialist broker will be able to gather from you details about the property - its location, age, size, and type - and form an accurate picture of the type of home buildings insurance you need. Married to his knowledge of the insurance market and the many products available, the broker will then be able to point you in the direction of the most appropriate and cost effective cover.



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It is only when you sit down and carefully itemise all of your personal possessions in your home that it begins to sink just how much of an investment they represent - or quite what a sum it would cost if you had to replace them all. It is surprising, therefore, how many people overlook the importance of home contents insurance and that amongst those who have taken the precaution of purchasing some form of cover remain nevertheless inadequately insured.

So what are the risks that the contents of your home are exposed to? There are probably rather more than you thought, ranging from theft and vandalism to damage by water from burst pipes or flooding, and of course fire. Depending on the type of home contents insurance you buy, accidentally inflicted damage might also be covered.

Home contents insurance is designed to cover all your possessions within your home, whether you are a tenant or owner-occupier. Most policies will also cover those items which you often take with you away from home, such as sports gear and cameras. Some of the more flexible policies will also automatically increase the amount covered over Christmas time, because that is when you will have additional items in the house to give as presents. For similar reasons, some policies also recognise the additional items likely to have been accumulated by couples who have just got married.

The basic choice when selecting home contents insurance is between cover on a "wear and tear" or "new for old" basis. The former is slightly cheaper because it provides an insurance valuation that deducts a percentage from the original purchase based on the number of years owned. The latter, which is also described as "replacement as new" will do precisely that - it will provide compensation with which to replace lost or damaged old items with new ones at their current price. Items generally excluded from such "new for old" are clothes and household linens.

It is very important to take the time and trouble of itemising and carefully valuing all of your household possessions, listing not only what you paid for them, but also their cost if you had to replace them at today's prices. The total is the amount you will want to insure - the so-called "insured sum". Not only does this set the maximum that the insurance company will pay out in the event of a claim, but also determines how much you will need to pay in premiums.

Beware any temptation of under-valuing your home contents in order to reduce the premiums however. In the event of a claim, the insurer will always refer to the total sum insured and even if your claim is for only one or two items, the maximum paid will be a proportion of the total sum insured - so you will be inadequately covered. By the same token, this makes it equally important to review and update the insurance value of your home contents on a regular basis.

Home contents insurance, therefore, offers indispensable protection of all your household and personal possessions, whether you are a tenant or owner-occupier. Although the insurance is relatively simple and straight forward, a reputable insurance broker will be only too pleased to offer the advice and guidance you need for buying the cover that suits you.



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