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Explaining the Costs of Home InsuranceHome insurance is a blanket term that refers to two separate types of insurance, often brought together under one single heading. The two types of insurance are buildings insurance, which covers the fabric of your house, and contents insurance which covers everything that you have inside your house. Generally speaking you can tell which category something falls into by simply answering the question: if you were to move house would you take it with you?So what are the factors that impact upon the cost of buildings insurance? Insurance companies work out the cost of your insurance policy by working out the risk of damage to which your house is exposed, and this depends principally on a number of factors. The first thing that is considered is the type of house that you have. If you have a little cottage on the top of a cliff it’s likely that it will cost more to ensure than a similar sized town house. Modern houses generally cost less to insure because they have to meet modern construction regulations and because they are less likely to suffer from wear and tear. The second thing to consider is the size of your house. The bigger the house, the more it is likely to cost to insure. This is linked to the rebuild cost of the house. Buildings insurance does not often the market value of the house but rather the rebuild cost of the house, and it is important to keep this in mind when you go shopping for a policy. The third thing to consider is when your house was built and its current state of repair. If your house is ancient and struggling to stay upright, then it’s going to cost a lot to insure because of the likelihood of it falling down altogether. A fourth important factor is geological factors, such as the kind of subsoil upon which the house is built and the presence of any underground springs or mines. One of the major threats to houses in Britain is subsidence, and this is almost exclusively determined by the type of soil and the presence of any underground springs or mines. Almost four million homes in Britain are currently at risk from subsidence, and one in fifty homes in the South East has been affected in some way. Subsidence is extremely expensive to fix, and potentially extremely damaging, and therefore increases the insurance costs. The final factor is any history of flood or storm damage in your area. On the back of 2007’s heavy flooding insurance companies are very wary of insuring high risk areas, therefore if you are in an area where you are likely to suffer from environmental damage, it will impact upon the cost of your policy. Your postcode is also taken into consideration when you apply for a policy, if you live in an area with a history of insurance claims you may well be considered as being in a high risk area, and there’s not much that can be done about it. Home insurance is a vital commodity. The most valuable object that most people own is their home and it should be protected accordingly. Home insurance does not have to be expensive however, and even in the wake of the credit crunch it is still possible to get good value home insurance policies that are competitive and ethical, from reputable firms such as the Co-Op.
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