General Insurance Guide

Understanding Insurance for Your Home, Property and Everyday Risks

Financial protection is not limited to life insurance, critical illness cover and income protection.

There is another important area of protection: General Insurance.

General Insurance is a broad term covering many types of insurance designed to protect property, possessions and other financial risks rather than someone's life or income.

For homeowners, landlords and property buyers, this can include insurance such as buildings insurance, contents insurance and landlord insurance.

The right insurance depends on what you own, how the property is used and the risks you want to protect against.

This guide explains what General Insurance means, the types of cover you may encounter and some of the important things to consider before choosing a policy.

What Is General Insurance?

General Insurance describes insurance products that generally protect against financial losses associated with property, possessions, liabilities and other risks.

This is different from protection insurance such as:

• life insurance;

• critical illness cover; and

• income protection.

Those policies are primarily concerned with people and their financial circumstances.

General Insurance can instead protect physical assets and certain associated financial risks.

What Types of General Insurance Are There?

General Insurance covers a very broad range of products.

For property owners, some of the most relevant can include:

• buildings insurance;

• contents insurance;

• combined buildings and contents insurance;

• landlord insurance;

• commercial property insurance; and

• certain additional forms of property-related cover.

Different policies serve different purposes.

Having one type of insurance does not automatically mean every risk associated with the property is covered.

Buildings Insurance

Buildings insurance is designed to protect the physical structure of a property against specified insured events.

Depending on the policy, this can include elements such as:

• walls;

• roof;

• floors;

• ceilings;

• permanent fixtures;

• fitted kitchens;

• fitted bathrooms; and

• certain garages or outbuildings.

Exactly what forms part of the insured building depends on the policy wording.

Contents Insurance

Contents insurance is designed to protect possessions within the home against specified insured events.

A useful way to think about the distinction is:

Buildings insurance protects the property itself.

Contents insurance protects many of the things you would take with you if you moved.

The exact definition varies between insurers, so the policy wording remains important.

Combined Buildings and Contents Insurance

Homeowners commonly require both buildings and contents protection.

These can sometimes be arranged under a combined policy.

Having the two together can make managing the insurance more straightforward, but the individual sections of the policy will still have their own terms, limits and exclusions.

The appropriate solution should be determined by the cover required rather than simply whether the policies can be bundled together.

Landlord Insurance

A property that is rented to tenants creates different risks from an owner-occupied home.

Standard residential home insurance may not be appropriate where the property is being let.

Landlord insurance can be designed specifically around rental properties.

Depending on the policy and options selected, it may include areas such as:

• buildings cover;

• landlord contents;

• property owner's liability;

• loss of rent following certain insured events;

• legal expenses; and

• other landlord-specific benefits.

Not every landlord policy provides all of these automatically.

Home Insurance and Your Mortgage

If you are buying a property with a mortgage, buildings insurance is particularly important.

Mortgage lenders will generally require appropriate buildings insurance to be in place as part of protecting the property on which their lending is secured.

Your solicitor or conveyancer can advise you when responsibility for insuring the property passes to you during the purchase process.

Do not assume that insurance only needs to be considered when you physically move into the property.

What Is an Insured Event?

Insurance does not cover every situation in which something goes wrong.

Policies specify the events and circumstances they insure.

Depending on the policy, insured events could include things such as:

• fire;

• flood;

• storm;

• theft;

• escape of water;

• subsidence;

• vandalism; and

• other specified risks.

The exact cover varies.

A policy should therefore be assessed according to its wording rather than simply because it is described as "home insurance."

Accidental Damage

Accidental damage may be included in some circumstances or available as an additional option.

This is designed to address certain unexpected and unintended damage, subject to the policy definition.

The scope can vary substantially.

It is important to understand whether accidental damage applies to:

• the building;

• contents;

• both; or

• neither unless additional cover is selected.

Personal Possessions Away From Home

Standard contents insurance may primarily protect possessions while they are at the insured property.

Some policies can provide additional protection for eligible personal possessions away from the home.

This could be relevant for items you regularly carry with you.

Limits, exclusions and requirements vary between policies.

High-Value Items

Expensive possessions may require particular attention.

Policies can have:

• single-item limits;

• total limits for valuables;

• requirements to specify certain items; and

• security conditions.

Do not assume an expensive item is fully protected simply because you have contents insurance.

Property Owner's Liability

Property insurance can sometimes include liability protection.

This can help protect against certain legal liabilities arising from ownership of the property, subject to the policy terms.

The scope and limits vary, particularly between homeowner and landlord policies.

Legal Expenses Cover

Legal expenses insurance may be included or offered as an optional addition to certain policies.

It can potentially help with specified legal costs where the circumstances meet the policy conditions.

This should not be confused with unrestricted access to legal representation for any dispute.

The insured circumstances, limits and exclusions should be checked.

Home Emergency Cover

Home emergency protection may also be available with some insurance arrangements.

Depending on the policy, it can potentially provide assistance for specified urgent problems affecting the home.

The definition of an emergency, available assistance and financial limits vary.

It should not be assumed to replace normal property maintenance.

General Insurance Does Not Cover Poor Maintenance

Insurance is designed primarily for insured events, not the gradual deterioration of a property.

Problems arising from:

• wear and tear;

• lack of maintenance;

• gradual deterioration; or

• circumstances specifically excluded by the policy

may not be covered.

Property owners remain responsible for appropriately maintaining their property.

Underinsurance

Underinsurance occurs when the amount of cover is insufficient for the risk being insured.

This can become particularly important following a substantial claim.

For buildings insurance, the relevant figure is not simply the property's market value.

For contents, it is important to consider what it would actually cost to replace the possessions being insured.

Incorrect assumptions about the amount of cover required can have significant consequences.

Buildings Insurance Is Not Based Simply on the Purchase Price

A property's market value and its rebuilding cost are different concepts.

The price someone is willing to pay for a property reflects factors such as:

• location;

• land;

• demand;

• local market conditions; and

• characteristics of the property.

Buildings insurance is concerned with the insured building and the cost basis specified by the policy.

Do not simply use the purchase price as the required buildings insurance figure unless the policy specifically operates on a different basis.

Policy Excesses

An excess is the amount you may need to contribute towards an eligible claim.

Policies can have different excesses for different types of claim.

A higher excess can sometimes result in a lower premium, but it also increases the amount you may have to pay when claiming.

The excess should therefore be considered alongside the premium.

Policy Exclusions

Every insurance policy contains exclusions.

These describe circumstances where cover does not apply.

They can vary significantly between insurers and products.

Reading the important exclusions is therefore an essential part of understanding what you are buying.

Policy Conditions

Insurance policies can also contain conditions that you are expected to meet.

These could relate to areas such as:

• property occupancy;

• security;

• property maintenance;

• how the property is used;

• notification of changes; and

• claims procedures.

Failure to comply with relevant conditions can potentially affect cover or a claim.

Unoccupied Properties

Insurance can become more complicated when a property is left unoccupied for an extended period.

This can happen during:

• renovations;

• probate;

• property sales;

• extended travel;

• tenant changes; or

• periods between purchase and occupation.

Standard policies may impose restrictions when a property remains unoccupied beyond the period specified by the insurer.

If circumstances change, the insurer should be informed where required.

Renovations and Building Work

Significant renovation work can change the risk being insured.

Standard home insurance should not automatically be assumed to cover every type of renovation or building project.

The insurer may need to know about substantial works.

Specialist insurance may sometimes be required depending on the project.

Tell the Insurer When Circumstances Change

Insurance is arranged based on information about the property and how it is used.

Relevant changes might include:

• moving out;

• letting the property;

• major renovations;

• operating a business from home;

• leaving the property unoccupied;

• extending the property; or

• acquiring particularly valuable possessions.

The insurer should be notified where required by the policy.

Price Is Only One Part of Choosing Insurance

It is easy to compare General Insurance based on premium alone.

But two policies costing similar amounts can provide very different cover.

Important considerations can include:

• sums insured;

• excesses;

• exclusions;

• accidental damage;

• valuables limits;

• alternative accommodation;

• legal expenses;

• home emergency benefits;

• claims conditions; and

• optional extras.

The cheapest policy is not automatically the most suitable.

Review Your Insurance Regularly

Insurance requirements change.

You may:

• move home;

• renovate;

• build an extension;

• purchase expensive possessions;

• become a landlord;

• change how the property is occupied; or

• significantly increase the contents of your home.

Reviewing cover periodically can help ensure the policy still reflects your circumstances.

General Insurance Checklist

Before arranging or renewing insurance, consider:

What exactly am I trying to protect?

Do I need buildings insurance, contents insurance or both?

Is the property owner-occupied or rented?

Is the property ever left unoccupied for extended periods?

Are there any valuable possessions that need to be specified?

Is accidental damage included?

What excesses apply?

What are the main exclusions?

Are there important security requirements?

Does the policy include alternative accommodation where relevant?

Do I need legal expenses or home emergency cover?

Have circumstances changed since the policy was originally arranged?

Understanding the answers helps you compare policies based on the protection they provide rather than premium alone.

Speak to Cambs Ely Mortgages About General Insurance

Insurance should reflect the property, how it is used and the risks you want to protect against.

Cambs Ely Mortgages can help you consider appropriate General Insurance alongside your wider mortgage and protection requirements.

We provide mortgage and protection advice to clients in Ely, Cambridge, Cambridgeshire, East Anglia and across England, with remote appointments available.

Building Blocks for a Brighter Future.

#BuildingBlocksForABrighterFuture

Important Information

This guide is intended for general educational purposes and does not constitute personalised insurance, financial, legal or tax advice.

Insurance policies vary between providers. Cover, exclusions, excesses, limits, eligibility and policy conditions depend on the insurer, product and individual circumstances.

Always check the relevant policy documentation to understand what is and is not covered.