House & Home Insurance

Policy documents

The documentation supporting your insurance policy will come in two parts: (i) a policy schedule which itemises the total amounts for which you are covered per item and also details what you are not covered for and (ii) the generic cover provided by your insurance company.

No two home insurance polices are identical. However, we set out below the sort of content that you might expect to find in a typical home insurance policy:
Definitions: most policies start with a list of 'definitions'
- in other words a list of the important words used in the policy and an explanation of what they mean legally. Sometimes you will find this at the end of the policy. The definitions may not seem that important but consider, for instance, what is meant by the word 'contents'. You may think it is obvious what this means. But it is surprisingly complicated in most policies. Here is a fairly standard definition:
"Contents" means Household goods, personal belongings, clothing and other items in the home, belonging to you or for which you are legally responsible including money, stamp, coin or other collections, guest's clothing and personal belongings, valuables such as pictures and furniture and business equipment"
- in all cases subject to a certain limit, say £500 in the case of cash and £5,000 in the case of business equipment.

However, the following are excluded from the definition of 'contents': "anything insured by any other insurance policy, any living creature, any motor vehicle of any type, landlord's fixtures and fittings, securities, documents and manuscripts, business assets (other than the business equipment referred to above and any part of the building for which you are responsible under a tenancy agreement."

Specific provisions

The document will then go on to itemise precisely what is, and is not, covered under the policy. We separate buildings insurance from contents insurance.

(a) Buildings insurance

Under a 'normal' buildings insurance policy the following events would be covered under your policy (known as 'insured events'):

Loss or damage to your buildings caused by:
- fire and smoke
- earthquakes
- explosions
- lightening
- aircraft, other flying objects or anything dropped from them
- riots, strikes, political disturbances or similar events
- being hit by a train, other vehicles and interestingly
- animals
- the collapse of television aerials, satellite dishes or masts associated with either
- trees, branches, telegraph poles or lamp posts
- theft or attempted theft
- vandalism
- floods
- water or oil escaping from domestic appliances, fish tanks or heating systems
- subsidence (but
- crucially
- see exemptions below for more on this)
- storms

As with all other forms of insurance, buildings insurance policies also contain a string of exemptions (ie circumstances in which the insurance company is not obliged to pay out). These will vary from policy to policy but some of the most common exemptions are listed below:
Loss or damage:
- caused by your pets
- to your own television aerial or satellite dish (as distinct from damage caused by one of these falling on the building)
- to your hedges, fences or gates
- while your home is unfurnished or unoccupied (see glossary for definitions) or let
- caused by rising ground water levels
- caused by frost

And by far the most crucial exemption of all is that relating to subsidence. A standard buildings insurance policy tells you that you are covered for subsidence and then goes on to list a bewildering array of items that the insurance company does not classify as subsidence. Usual exemptions from the subsidence clause include loss or damage caused by:

- coastal or river erosion
- new structures bedding down, settling, expanding or shrinking
- newly made up ground settling
- faulty design, workmanship or materials
- any construction work or repairs to the buildings
- normal settlement, shrinkage or expansion
- any chemical reaction

furthermore, subsidence cover does not usually apply to:

- swimming pools, tennis courts, terraces, patios, drives, paths and walls unless the main buildings themselves are damaged at the same time
- damage to floor slabs

so you may think you are covered for the effects of subsidence but check very carefully indeed whether your 'common sense' definition of subsidence is the same as your insurance company's. It probably isn't.

Some buildings insurance policies will also cover you (for an additional cost) against certain additional items such as:

- accidental damage to the buildings
- accidental damage and breakage to such things as windows, sanitary fittings, solar panels, cables and pipes
- loss of rent from a tenant while your home cannot be lived in as a result of damage covered by the policy
- certain other expenses following a claim from the insurance company (eg the cost of removing debris, architects, surveyors and solicitors' fees)

in all cases
- of course
- subject to certain exemptions and exceptions (and check these particularly in relation to accidental damage to the buildings. You will find that the exemptions list is a long one).

Finally, a standard buildings insurance policy will also cover you for certain liabilities as a home owner and, in particular, the costs of any accident occurring in your home which results in:

- injury to some one other than you or a domestic employee
- loss or damage to property which you do not own

in each case subject to an upper limit (say £2 million) and also to the usual shopping list of exemptions.

(b) Contents insurance

The circumstances in which you are entitled to claim compensation under a contents insurance policy will be very similar
- if not identical
- to those in which you can make a claim under a buildings insurance policy.(See list immediately under (a) Buildings insurance above). Accidental damage will also be included if you have elected to pay the additional premium for this.

Generally contents cover will apply to some or all of the following:

- money
- stamp, coin and other similar collections
- valuables, pictures and works of art
- guests' clothing and personal belongings
- business equipment (computers etc)
- the cost of replacing any item stolen from a garage or outbuilding
- loss of rent following a claim on the insurance policy
- other items outside the house but 'within the boundary of your home'
- certain gifts (wedding gifts, Christmas presents
- for a limited period of time)
- replacing locks and keys
- the contents of your fridge or freezer
- damage to the interior caused by oil leaks
- the cost of replacing the deeds of your house if they are lost or damaged
- the cost of replacing damaged or stolen trees, plants or shrubs
- conveyancing costs, estate agents' fees and removal costs arising from violent crimes committed in your home
- the possessions of your children if in the property while they are in full time education
- the cost of replacing damaged china, glass, pottery and similar items
- personal liability if anyone is injured in your home
- liability for accidents to domestic employees
- personal unspecified valuables such as clothing and personal belongings
- credit cards
- legal expenses incurred in connection with consumer protection complaints, civil claims against you, personal injury claims and employment disputes

in all cases subject to a maximum limit and a long list of exemptions which you should read carefully. You should also pay particular attention to valuables. Many people have items in their house (pictures, furniture etc) which are more valuable than they realise. The upper limit of valuables is often quite low (say £1-2,000 per item). If you have valuables worth more than this amount you should consider taking out separate cover
- potentially with a firm that specialises in the insurance of art and antiques.

The insurance policy will conclude with a list of even more 'general exclusions' (ie circumstances in which the insurance company does not have to pay out) and a section on what procedures to follow if you want to make a claim. In the case of the general exclusions pay particular attention to the security requirements. One of the most common ways insurance companies get out of settling household insurance claims is saying that security is inadequate. If you have an alarm and it is not on when you are burgled the chances are that the insurance company will use this to reduce the amount of your claim
- or not pay it at all. Insurance companies are also very hot on bolts and locks on windows. Check the security section of your policy document carefully. It is worth doing.