Home Insurance Explained
Buildings and contents insurance for UK homeowners - what's covered and why mortgage lenders require it.
This video covers UK buildings and contents insurance: what's covered (fire, flood, theft, subsidence), calculating rebuild value vs market value, why mortgage lenders require buildings insurance from exchange, accidental damage add-ons, and the Flood Re scheme for high-risk properties. We explain policy exclusions and claims processes.
What buildings insurance covers: The physical structure of your home including walls, roof, floors, permanent fixtures like fitted kitchens and bathrooms, and outbuildings. Cover includes damage from fire, flood, storms, subsidence, and impact.
What contents insurance covers: Your personal possessions inside the property including furniture, electronics, clothing, and valuables. Items are typically covered both inside the home and temporarily removed (with limits).
When you need both: Homeowners need buildings insurance; renters typically only need contents. If you own your property, mortgage lenders require buildings insurance as a condition of your loan, usually from exchange of contracts.
Your mortgage lender has a financial interest in your property. If your home is damaged or destroyed without insurance, the lender loses their security. That is why buildings insurance is a mandatory condition of your mortgage from exchange of contracts.
When arranging cover, insure for the rebuild cost—not the market value. The rebuild cost is what it would cost to completely reconstruct your property from scratch, including clearing the site and professional fees. This is usually lower than the purchase price because it excludes land value.
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Your home may be repossessed if you do not keep up repayments on your mortgage.