In this guide, we aim to guide you through the types of insurance needed to provide adequate cover for your home, possessions and family. The information included is a general overview of the types of insurance. For more detailed information and quotes, please get in touch.

What is building insurance and do I need it?

Building Insurance protects you from the cost of having to rebuild or repair your home if it is damaged or destroyed.

It covers the physical structure of your home, such as the walls, roof and windows and any permanent fixtures and fittings which would include a fitted bathroom suite or fitted kitchen.

When applying for building insurance an insurer would ask some of the following questions to provide a quote:

• Your address and when your property was built
• Type of property you have
• If your home is made of standard material or not
• Structure and Roof
• If you live in an area likely to flood
• Previous claims

If you have a mortgage, you need to have building insurance as the mortgage lender will want to know your home is protected because it is their security.

If you are a BTL Landlord you will need landlord building insurance.

What is contents insurance and do I need it?

Contents insurance covers all items in your home that you would take with you if you moved home.  This would extend to many household items such as televisions, computer equipment jewellery and many more.

Contents insurance protects you against damaged caused to your personal items by:

• Flooding
• Weather (storms and lightning)
• Fire or Explosion
• Burst of Frozen pipes and water damage
• Theft

Contents insurance is not mandatory but it is highly recommended as it is designed to protect your belongings from the above risks/events.

When applying for contents cover an insurer would seek the following information:

• The total value of your belongings
• Your address and who lives in your home (adults and dependants)
• Previous claims history
• Security provisions in your home

Building and Contents policies are usually purchased together and renewed annually. Premiums are normally paid monthly but policies can be paid for annually too.

What are the different types of mortgage protection insurance?

The purpose of protection policies is to pay out if you become very ill or die.  They are usually sold with a mortgage. There are three main types of mortgage protection insurance which we detail below:

Life Insurance

Life insurance is a policy designed to pay out a lump sum on the death of the policyholder to help support your family if they rely on your salary for example.

Your family will be allowed to spend the money on whatever they want.  In the event the policy has been put in place to cover a mortgage the idea would be to pay off that mortgage with the proceeds of the policy.

Life insurance is not mandatory but it is sensible to have in place if you are:

• Married
• Have a joint mortgage with a partner
• Have children
• Have other people within your household that are financially dependant on you

Life insurance is quoted based on the age of an applicant and if they are a smoker or not.  The general health of applicants will be considered at the underwriting stage but generally, most applicants can obtain some cover even with historical health issues.

Premiums for Life Insurance are usually paid monthly and policies will stay in place for a long time but should be reviewed regularly with a broker to ensure that they meet your needs.

Types of Life Insurance

Level Term Insurance

This type of policy pays out a lump sum if you die within a given time which is decided when you take out the policy.  For example, if you borrowed £100,000 on a mortgage over 20 years you may have a policy which covers the same amount for 20 years.

Decreasing Term Insurance

Also known as mortgage protection policy, this is a life policy whereby the lump sum payable reduces each year.  This is often used against a capital repayment mortgage to ensure that the mortgage is repaid in the event of the death of a policyholder.  Decreasing term is cheaper than level term as the amount it is likely to payout would be less than that of a level term policy.

Critical Illness

This cover also pays out if you fall very/critically ill.  The cost of cover is set at outset and is paid out in the form of a lump sum. 

Definitions of critical illness vary amongst insurers so it is important to check if you specifically want something to be included within your policy.

You can include/add critical illness cover as part of a life insurance policy or take it out as a separate policy. The cost of critical illness cover is significantly dearer than stand-alone life insurance as statistically, an individual is far more likely to suffer a critical illness during a mortgage term for example rather than die during the same mortgage term.

Income Protection

This type of policy aims to cover a proportion of your regular income if you are too ill to work.  As it doesn’t cover your whole income is should help in meeting commitments such as mortgage payments or household expenditure until you are fit enough to return to work.

The cost of income protection will depend on a number of things and you may need several quotes to narrow down your level of cover.  The amount you pay will depend on:

• Amount of income you are covering
• How long your policy shall run for
• The deferral period – this is how quickly your policy will start paying out after your not working
• How long the policy will pay out for after claiming (could be 12/24 months or longer)
• Indexation (the amount of money you receive increases with inflation
• Premiums can be guaranteed or reviewable

An insurer will consider your health and lifestyle when offering terms for income protection. A general rule of thumb is the younger and healthier an applicant is the cheaper a policy is likely to be. 

If an applicant smokes, for example, this will make a policy dearer than that of a non-smoker.  Should you cease smoking for a full year then you could re-apply for a new policy and possibly be offered non-smoker rates which could dramatically reduce your premiums.

Your occupation will also influence the cost of cover as some jobs are considered more high risk than others.  For example, an office worker is likely to be offered cheaper insurance than an HGV driver.

This is just a snapshot of some of the available insurances. Other types of protection are available but these are the main ones you would tend to consider around a mortgage.