Home insurance explained: buildings vs contents

Two policies in one. Buildings: the house. Contents: your stuff. Buy together or separate. What you need depends on owning vs renting.

Buildings insurance

Buildings insurance covers the structure of your home. We’re talking walls, roof, floors, fitted kitchens, the lot. It also includes things like your garage, outbuildings, driveways, pipes, and wiring. Essentially, anything that would cost a fortune to replace if a fire destroyed it or a storm ripped the roof off.

You’re looking at somewhere between £200 and £400 a year for this (the average is around £240 for buildings-only cover).

How much cover do you actually need?

Here’s the thing that catches people out: you need to insure the rebuild cost, not what your house would sell for. Your place might be worth £350,000 on the market, but rebuilding it from scratch might only cost £200,000. Land value doesn’t matter when you’re making an insurance claim - it’s just the bricks and mortar.

Most insurers will estimate your rebuild cost based on details you provide during the quote. The Association of British Insurers has a calculator if you want to do it yourself, or you can pay for a proper surveyor to assess it. What matters is getting it right, because if you underinsure (say you’re covered for £150,000 when the rebuild cost is actually £200,000), your payout gets reduced proportionally. Some policies protect you against this, but plenty don’t.

Contents insurance

This is the stuff inside your home. Furniture, TVs, computers, clothes, that expensive watch, bicycles, garden furniture - the whole lot. If someone breaks in and nicks your laptop, or a burst pipe floods your sofa, contents insurance pays out. Most people need somewhere between £30,000 and £60,000 of contents cover.

You’ll typically pay £80-£200 a year depending on where you live and how comprehensive you want it (the average for contents-only is around £106). A combined buildings and contents policy averages about £375.

Valuing what you actually own

The hardest part of contents insurance is working out what everything costs to replace. Most people seriously underestimate this until they sit down and properly add it up. Go through each room and be honest about it. Your living room probably has more than you think - add up the sofa, chairs, TV, stereo, lamps, and suddenly you’re at three to eight grand. Kitchen appliances, a nice dining table, and some proper storage units can easily hit two to five thousand. Even bedrooms rack up quickly with wardrobes, bed frames, and all the things you’ve accumulated.

A rough guide: living rooms tend to be £3,000-£8,000, kitchens £2,000-£5,000, main bedroom £3,000-£6,000, other bedrooms £1,500-£4,000 each, bathrooms £500-£1,500, and garages or sheds £1,000-£3,000. And again, if you’re underinsured, the payout gets reduced proportionally just like with buildings.

What’s covered and what isn’t

Standard policies cover the big, sudden stuff: fire, theft, attempted theft, storms, floods, burst pipes, vandalism, falling trees, and subsidence. What they don’t cover is the gradual wear and tear, damage that happens from someone just wandering in through an unlocked door, damage your pets cause, or anything deliberately damaged by you (which wouldn’t be very helpful to the insurer anyway). War and terrorism are also excluded, as is business equipment.

The exclusions do vary quite a bit between insurers, so it’s worth actually reading the policy wording rather than assuming everything is covered.

Accidental damage cover

Your standard policy covers specific events - the ones listed above. Accidental damage is the optional extra that covers the stupid things we all do. Spilling red wine on the carpet. Drilling through a pipe when you’re putting up shelves. Kids putting a football through the window. Dropping the TV.

It’ll cost you an extra £20-£50 a year, but if you’re genuinely clumsy or you’ve got young children who break things regularly, it’s probably worth it.

Away from home cover

Some contents policies only cover items when they’re inside your home. Others are more generous and will cover things you take with you. Personal possessions cover (laptops, phones, bikes, cameras) usually comes with a single-item limit of around £1,500-£2,500. Some policies also cover student possessions at university, and items in your garden too.

Check what yours includes. If you’re regularly carrying expensive stuff around, you might need to ask your insurer to add specific items for extra cover.

High-value items

Here’s where you need to be careful. Most policies limit what they’ll pay out for a single item. You’ll typically find limits around £1,500-£2,500 for individual items, £5,000-£10,000 for total jewellery, £250-£500 for cash, and £500-£1,000 for bikes. If you’ve got a £4,000 engagement ring or a fancy £3,000 bike, you need to tell your insurer specifically. They’ll list it separately and you’ll pay a bit more, but at least you’ll actually be covered if something happens to it.

The excess

Every claim has an excess - that’s the bit you have to pay yourself before the insurer steps in. There are two types.

Your voluntary excess is what you choose. Higher excess means lower premiums, so most insurers offer options like £0, £100, £250, or £500. The compulsory excess is what the insurer sets, and you pay both the voluntary and compulsory on each claim. So if you’ve set a £250 voluntary excess and the insurer’s compulsory is £100, you’re paying £350 out of your pocket.

Subsidence is different. If the ground under your house shifts and cracks appear, that excess jumps to somewhere between £1,000 and £2,500. It’s a huge cost for insurers, which is why they charge so much.

Who actually needs what

If you’re a homeowner with a mortgage, your lender will require buildings insurance (they’ve got a financial stake in your house not burning down). Contents is recommended too. If you own your home outright, you still should have both - there’s no requirement, but it’s sensible. Renters don’t need buildings insurance (that’s the landlord’s job), but they absolutely need contents. Lodgers might want contents cover depending on their situation. If you’re in a flat, check your lease - buildings insurance is often handled through the building’s management and included in your service charges.

Leaseholders of flats should double-check this, as it varies. Don’t just assume it’s covered.

Making a claim

If something happens, act quickly. First, stop any more damage happening (cover a broken window, turn off water if there’s a leak). If it’s theft or a break-in, report it to the police straightaway - you’ll need the crime reference number. Then contact your insurer. Most require notification within 24-48 hours, so don’t sit on it.

Document everything. Take photos of damaged items, gather receipts, make lists. Get quotes for repairs or replacements. And don’t throw the damaged stuff away - insurers may want to inspect it.

Here’s something to think about though: small claims can actually hurt your premium more than the claim is worth. A £400 claim might save you £100, but then your premiums go up for several years. It’s worth doing the maths before you claim.

Saving on premiums

The obvious one is increasing your voluntary excess - it does lower your premium. Paying annually instead of monthly saves you from interest charges (you’ll save 10-20% this way). Improving home security - alarms, good locks - helps. Bundle buildings and contents together if you can. Check for any discounts you might qualify for (new customer, loyalty, profession). And compare prices every year - loyalty is rarely rewarded in home insurance.

Comparison sites give you most of the market, but some insurers don’t appear on them. So it’s worth going direct to a couple of companies too.