Insuring your home and contents

Your home and its contents are among your most valuable possessions. Insuring them against fire, theft, and other damage should be a priority. If you have a mortgage you will be required to take out compulsory buildings insurance, which varies in price depending on the size, location, and rebuilding cost of your property. Lenders require this insurance not for your benefit but for theirs, as their priority is to protect their financial interest in the property.

The minimum insurance you require is the cost of rebuilding your home in the event of its destruction. Your rebuilding costs are not the same as your mortgage amount, or the market value of your property. If you have any doubt about the rebuilding cost of your property you should arrange for independent valuation or survey. Take care not to underinsure your home or contents because most home insurance policies include what is known as an ‘averaging’ clause which determines that if you underinsure your property, for example by 50 per cent, the insurer is only obliged to pay you 50 per cent of your claim.

Most general insurance companies offer combined buildings and contents policies. Some automatically provide contents cover worth up to half the value of the building cover. Engage an independent financial advisor to help find the right policy for you and to help you make sure you have put a correct value on your fittings and personal belongings. Premium discounts may be available, which will depend on your age, whether the house is occupied during the daytime, and if it is fitted with approved locks, fire, and burglar alarms, etc.

You are not legally obliged to buy buildings and contents insurance from your lender thought the company will be happy to offer you a policy. You should also ensure, once your mortgage is paid off, that your building and contents are properly valued and insured.

Hilary Foley is an independent financial advisor with Lifestyle Mortgages. She can be contacted at (091 ) 762000, LoCall 1890 441 441, or e-mail [email protected]

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