InsuoraBuildings vs. contents insurance
- Buildings insurance
- Covers the structure of the property — walls, roof, floors, fixed fittings (kitchen units, bathroom suite, fitted wardrobes), and permanent outbuildings (garages, garden walls). Required by virtually all UK mortgage lenders as a condition of the mortgage. Covers damage from fire, flood, storm, subsidence, escape of water (burst pipes), vandalism and accidental damage (if selected). The sum insured should be the rebuild cost — not the market value. The rebuilding cost of a property can be significantly more or less than what you paid for it.
- Contents insurance
- Covers your possessions inside the home — furniture, electronics, clothing, jewellery (up to a specified limit), bicycles, and cash. Policies typically cover theft, accidental damage, fire and flood. High-value single items (watches, jewellery, art) usually need to be separately listed (scheduled). Contents cover can often be extended to cover items away from home ('all risks' or personal possessions cover).
Why the rebuild value matters
Underinsurance is the most common home insurance mistake in the UK. If you insure your buildings for £150,000 but the actual rebuild cost is £250,000 and you suffer a total loss, you may only receive 60% of a claim under the average clause (proportional reduction for underinsurance). The BCIS (Building Cost Information Service) rebuild calculator, available free at the ABI website, provides a professional rebuild cost estimate. Rebuild costs have risen 30–40% since 2020 due to construction material and labour inflation — review your sum insured annually.
Flood and subsidence risk
Around 5.2 million properties in England are estimated to be at risk of flooding (Environment Agency, 2023). The Flood Re scheme (a reinsurance pool jointly funded by government and insurers) makes flood insurance available and affordable for most high-risk properties built before 2009 — without Flood Re, many would be uninsurable. You can check your property's flood risk free at the Environment Agency's Long Term Flood Risk Assessment tool (gov.uk/check-long-term-flood-risk).
Subsidence — where ground movement causes structural cracking — is a risk particularly in London and South East England (expansive London clay) and former mining areas. Subsidence claims can be very expensive; many insurers apply higher excesses (£1,000+) in high-risk postcode areas.
Other factors that affect your premium
- Voluntary excess — Choosing a higher voluntary excess (on top of any compulsory excess) lowers your premium. A £250–500 excess typically saves 8–16%. Only choose an excess you could comfortably afford to pay in a claim.
- Claims history — A claims-free discount of 20–25% is common after 5–6 years without a claim. Even a single claim can significantly raise your renewal premium for 3–5 years.
- Accidental damage cover — Standard policies cover defined perils (fire, flood, theft, storm). An accidental damage add-on extends cover to accidents such as spilling wine on a laptop, drilling through a pipe, or dropping a TV. It typically adds 15–20% to the premium and is worth considering for households with children or valuable electronics.
The FCA's 2022 pricing rules
Since January 2022, the FCA requires insurers to offer renewing home insurance customers a price no higher than they would be charged as a new customer via the same channel. This ended the 'loyalty penalty' where long-standing customers subsidised introductory discounts. However, prices still vary significantly between insurers — comparing the market at renewal remains worthwhile.
Frequently asked questions
- Is home insurance compulsory in the UK?
- Buildings insurance is not legally required, but virtually all mortgage lenders make it a contractual condition of the mortgage. If you own a property outright (no mortgage), it is technically optional — though inadvisable to go without. Contents insurance is always voluntary.
- Does home insurance cover accidental damage?
- Standard policies typically cover accidental damage to fixed installations (e.g., cracking a bath, breaking a window). Accidental damage to contents (e.g., spilling wine on a laptop, dropping a TV) usually requires an optional 'accidental damage' add-on. Check what is and is not covered by default before assuming.
- How do I calculate the right contents value?
- Walk through every room and list everything you would need to replace at current retail prices if the home were destroyed. Many people significantly underestimate their contents value. Online contents calculators (available from most UK insurers) help by prompting room-by-room. As a rough sense check: a typical UK household has contents worth £50,000–60,000, but this varies widely.