Own your house? What you need to know about insurance

If you're a homeowner, you want to be sure your home and your belongings - the contents - are protected by insurance in the event something goes wrong.

The chances are you've saved long and hard to buy your property, and if anything happened to it, it could be financially and emotionally devastating.

Although insurance can't take away the upset you're likely to experience if, for example, your home is damaged by fire or flood, it can at least provide peace of mind that you will be able to replace or repair what you've lost.

There are two types of home insurance, buildings and contents cover. Here's how they work and how you can keep premiums to a minimum without compromising on quality of protection.

Buildings insurance

Buildings insurance covers your actual home rather than its contents. So if, for example, it was destroyed in a fire, it will pay for the cost of re-building your property.

The amount of cover you need is therefore based on the re-build value of your home, rather than what it is valued at. So while your property might be valued at £300,000, but its re-build value could only be £150,000.

If you take out cover for your property's value and not the re-build cost, you risk either being over or under-insured, which could have serious financial consequences if something does go wrong.

Our home insurance quotation service provides guidance to you know you're picking an accurate sum insured for your buildings policy.

Contents insurance

Contents cover, it offers valuable protection in the event that your possessions are stolen, or if they are damaged by fire or flood. When working out how much contents cover you will need, it's a good idea to do it room by room, otherwise it can seem a bit daunting and it's easier to miss things which should be included.

The amount you insure your contents for should basically be the amount you need to replace everything you own that's in your home - so that includes all your electrical items such as iPads, sound systems and televisions, as well as personal effects such as jewellery and clothing. Don't forget pictures and paintings too.

If you have any items that are particularly valuable, you will need to disclose these to your insurer, as many policies have a single item limit - the maximum that will be paid out on any one item (usually around the £1500 mark). That means you may have to pay a small additional premium to insure anything that has a value over this limit.

Ways to reduce the cost of cover

If you opt to cover both your building and contents insurance with the same provider you will usually be entitled to a discount.

You can also sometimes get money off your insurance if you fit additional security measures, such as an insurer-approved alarm.

You might also want to think about increasing your excess too, which is the part of any insurance claim you pay yourself. Home insurance policies typically come with a compulsory excess, but you can choose to pay a voluntary excess on top of this. Bear in mind, however, the excess must remain affordable - otherwise you might not be able to make a claim at all.

Always compare several quotes from different insurers before buying as premiums can vary widely, and check cover limits carefully, as cheapest isn't necessarily best if it doesn't provide you with sufficient financial protection.