Do You Have to Have Home Insurance?

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Home insurance itself is not a legal requirement; however, it is essential to protect the huge asset of the physical building and the precious contents within it. Home insurance is a policy made up of both buildings insurance and contents insurance.

While home insurance as a whole is not mandatory, buildings insurance can be required by mortgage lenders as part of the contract. But even if the property is owned outright, buildings insurance is hugely important in providing that financial protection for the home should it be damaged or destroyed by a fire, flood or another event. Without an adequate policy in place, the whole property could be lost.

Buildings insurance protects the physical aspects of the property, from the roof and walls to windows and floors. Policies are generally sold on a risk-based basis where only the listed risks are covered, but there are exceptions to this with all-risk policies, which cover everything except the exempt risks listed.

Similarly, contents insurance offers protection to the items within the home, such as furniture and clothes. The cover protects the items from theft, loss or damage due to fire, water or smoke. However, there are usually options to add-on to the policy with cover for accidental damage.

When is home insurance required?

Home insurance is vital for all homeowners to protect both their physical property as well as their items within it. But home insurance is made up of two types of cover – buildings and contents. These insurance types can be purchased separately or together in a home insurance policy.

Buildings insurance can require a mortgage, so it can be mandatory unless the home is owned outright. Regardless of if the cover is needed for a mortgage, it is vital to protect the building from a disaster such as a fire or a flood. Depending on the situation, the amount of cover and any additional features can be chosen, but a good base level is to have cover to meet the cost of rebuilding the home should the worst happen. The Building Cost Information Service (BCIS) has a rebuild calculator to help work out that cost.

Contents insurance is not a requirement, but it offers protection to the items inside the home like furniture, clothes and jewellery if they are stolen, lost or damaged from incidents such as fire or flood. Policies often have the option of additional extras such as accidental damage, which can cover issues such as wine spilt on a carpet.

Why you should have home insurance

Home insurance policies offer essential financial protection for homes, right from the roof down to the sofas and carpets. Damage to the building can be hugely expensive to repair, and rebuilding a home can be impossible without insurance in place. This is why most mortgage lenders will insist on there being a buildings insurance policy in place.

Inside the home holds the personal property of the homeowner – items like clothes and jewellery, electrical items like mobile phones and laptops. These items are replaceable, but a fire destroying rooms full of possessions or even the whole home can be devastating emotionally and financially.

For both contents and buildings insurance cover, accidental damage can be added. While the basic insurance cover provides protection for the property and contents from incidents such as fire or water damage, accidental damage provides financial protection if the damage is caused through an incident such as spilling wine on furnishings or breaking a coffee table.

There are also other optional extras, such as:

  • Accidental loss, such as losing a wedding ring on the bus.
  • Home emergency cover.
  • Cover for valuables, which might not otherwise be covered due to their cost.

Do you have to have home insurance with a mortgage?

A full home insurance policy, which includes contents cover, is not mandatory with a mortgage, but mortgage lenders will often make buildings insurance a requirement.

That does not mean content insurance is not important, only that mortgage lenders are keen to protect the asset they have invested in. A minimum level of requirement advised is the cost of rebuilding the property if it were destroyed. But there are also other options available for additional features and cover, which the homeowner may want.

These include:

  • Accidental damage.
  • Alternative accommodation for if the home becomes inhabitable due to an incident such as a fire.
  • Public liability, to offer protection in the event of a visitor becoming injured in the property and suing.

For those renting, contents insurance is still an important cover to consider. While the landlord or property owner will need to have landlords insurance to protect the physical building, the possessions are not included. Furniture owned by the tenant, clothes, jewellery and paintings all needs to be covered by a separate policy of contents insurance in this instance, with the renter as the policyholder.

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