Insure your home

House insurance falls into two general categories: buildings and contents insurance. If you buy a house with a mortgage as your primary funding source, the mortgage lender will normally require, in accordance with the principles of responsible lending, that you take out some form of buildings insurance. This ensures that your mortgage is protected – if the house burns down, the asset on which the mortgage was secured will no longer exist, and while you would still be liable for the mortgage repayments it is probable you would also then be in financial difficulty and unable to afford them, because you'd also have to pay rent or another mortgage elsewhere.

The majority of mortgage lenders will offer an integrated package comprising mortgage as well as buildings insurance. However you should realise that you could often be paying far more for your home insurance if you took it at the same time as your mortgage, from the same provider. It is recommended that you shop around for the best deal, as while you may be obliged to take out buildings insurance as a minimum, it does not have to be with the same provider.

A standard house insurance policy will as a minimum insure you for buildings only, which protects against the financial consequences of things like flood, fire, and other major events, although you should be careful to read the small print as some policies exclude 'Act of God' such as tornadoes or hurricanes – thankfully the number of policies excluding such events are on the decrease.

Buildings insurance does not cover you for the fixtures and fittings in the property, and theft of personal possessions, and there can be nothing worse than finding you have suffered a break in. It is recommended that you take out a quality home insurance policy with someone like Co-operative who will work with you to ensure that everything is covered. Most people underestimate the value of their contents in the hope of reducing their premiums, but if you go with a home insurance provider like RIAS, who offer up to 1/3 off contents cover, you won’t have to do this. RIAS can talk you through the various options available to you, and if you choose to buy online there is a helpful quotation calculator built in to their website.